stock of New Image Products are quite cyclical. In a boom economy, the stock is expected to re 3 percent in comparison to 14 percent in a normal economy and a negative 18 percent in a recessionary period. The proba of a recession is 18 percent while the probability of a boom is 22 percent. What is the standard deviation of the returns on t =tock? 12.08 percent 15.83 percent 13.71 percent 11.56 percent

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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The returns on the common stock of New Image Products are quite cyclical. In a boom economy, the stock is expected to return
23 percent in comparison to 14 percent in a normal economy and a negative 18 percent in a recessionary period. The probability
of a recession is 18 percent while the probability of a boom is 22 percent. What is the standard deviation of the returns on this
stock?
12.08 percent
15.83 percent
13.71 percent
11.56 percent
Transcribed Image Text:The returns on the common stock of New Image Products are quite cyclical. In a boom economy, the stock is expected to return 23 percent in comparison to 14 percent in a normal economy and a negative 18 percent in a recessionary period. The probability of a recession is 18 percent while the probability of a boom is 22 percent. What is the standard deviation of the returns on this stock? 12.08 percent 15.83 percent 13.71 percent 11.56 percent
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