Security Returns if State Occurs State of Economy Bust Boom Probability of State of Economy Roll Ross .40 .60 -10% 28 21% 8 Calculate the expected returns for Roll and Ross by filling in the following table (A negative value should be indicated by a minu sign. Do not round intermediate calculations. Calculate the product using the decimal value of the probability and the percen value of the return. Input all of your answers as a percent rounded to 2 decimal places.) Roll Ross State of Economy Probability of State of Economy Return If State Occurs Product Return If State Occurs Product Bust .40 -10% % 21 % % Boom 60 28 % % E(R) = 12.80 % 8% E(R)= % 13.20 %
Security Returns if State Occurs State of Economy Bust Boom Probability of State of Economy Roll Ross .40 .60 -10% 28 21% 8 Calculate the expected returns for Roll and Ross by filling in the following table (A negative value should be indicated by a minu sign. Do not round intermediate calculations. Calculate the product using the decimal value of the probability and the percen value of the return. Input all of your answers as a percent rounded to 2 decimal places.) Roll Ross State of Economy Probability of State of Economy Return If State Occurs Product Return If State Occurs Product Bust .40 -10% % 21 % % Boom 60 28 % % E(R) = 12.80 % 8% E(R)= % 13.20 %
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Security Returns if
State Occurs
State of
Economy
Bust
Boom
Probability of
State of Economy
Roll
Ross
.40
.60
-10%
28
21%
8
Calculate the expected returns for Roll and Ross by filling in the following table (A negative value should be indicated by a minu
sign. Do not round intermediate calculations. Calculate the product using the decimal value of the probability and the percen
value of the return. Input all of your answers as a percent rounded to 2 decimal places.)
Roll
Ross
State of
Economy
Probability of
State of Economy
Return If
State Occurs
Product
Return If
State Occurs
Product
Bust
.40
-10%
%
21 %
%
Boom
60
28 %
%
E(R) =
12.80 %
8%
E(R)=
%
13.20 %
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