Answered: calculate the mean,variance, and the…

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calculate the mean,variance, and the standard deviation

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 8P: A stock is trading at $80 per share. The stock is expected to have a yearend dividend of $4 per...

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Question

One invests 100 shares of IBM stocks today. He expects that there couldbe five possible opening prices with the respective probabilities at 9:30 a.m. in NYSE thenext day. The following table lists these possible opening prices and their respectiveprobabilities:Outcome 1Outcome 2Outcome 3Outcome 4Outcome 5Possible Opening Price ofIBM,Xi$182.11$163.88$180.30$216.08$144.92Probability,pi13%19%33%17%18%LetXrepresent the five random opening prices of IBM the next day, calculate the mean,variance, and the standard deviation ofX. Make your comments on the results you obtain.(Keep two decimals)i

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