State of Economy Bust Boom State of Economy Probability of State of Economy 0.50 0.50 Bust Boom Security Returns if State Occurs Calculate the expected returns for Roll and Ross by filling in the following table: Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Calculate the product using the decimal value of the probability and the percentage value of the return. Input all your answers as a percent rounded to 2 decimal places. Probability of State of Economy 0.50 0.50 Roll -188 19 Return if State Occurs -18 Ross 12% 5 Answer is complete but not entirely correct. Roll % 19 % E(R)= Product % 78.00 10.00 % 0.50 % Return if State Occurs 12 5 Ross % % E(R)- Product 12.00 % 5.00 % % 8.50

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Q: Are these written in your own words?

A: Yes the answer is writtern in own words. Please find a alternate answer below

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A:

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Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.