You have chosen biology as your college major because you would like to be a medical doctor. however, you find that the probability of being accepted into medical school is about 10 percent. if you are accepted into medical school, then your starting salary when you graduate will be $300,000 per year. however, if you are not accepted, then you would choose to work in a zoo, where you will earn $40,000 per year. without considering the additional educational years or the time value of money, what is your expected starting salary as well as the standard deviation of that starting salary?

Expected Returns:You have chosen biology as your college major because you wouldlike to be a medical doctor.However, you find that the probability of being accepted tomedical school is about 10 percent.If you are accepted to medical school, then yourstarting salary when you graduate will be $300,000 per year.However, if you are notaccepted, then you would choose to work in a zoo, where you will earn $40,000 per year.Without considering the additional educational years or the time value of money, what isyour expected starting salary as well as the standard deviation of that starting salary?Solution:E(salary) = 0.9($40,000) + (0.1) ($300,000) = $66,000σ2salary= 0.9($40,000 - $66,000)2+ (0.1) ($300,000 - $66,000)2=$6,084,000,000 =>σsalary= ($6,084,000,000)1/2= $78,0007.4Historical Market Performance:Describe the general relation between risk and returnthat we observe in the historical bond and stock market data.Solution: