The common stock of Escapist Films sells for $25 a share and offers the following payoffs next year: Boom Normal economy Recession Dividend $0 Stock Price $ 18 1 26 3 34 The common stock of Leaning Tower of Pita Inc. is selling for $80 and offers these payoffs next year: Boom Normal economy Recession Required: Stock Dividend Price $ 8 $240 4 90 0 0 Calculate the expected rate of return and standard deviation of a portfolio half invested in Escapist and half in Leaning Tower of Pita. All three economic scenarios are equally likely to occur. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Expected return 42.50 % Standard deviation %
The common stock of Escapist Films sells for $25 a share and offers the following payoffs next year: Boom Normal economy Recession Dividend $0 Stock Price $ 18 1 26 3 34 The common stock of Leaning Tower of Pita Inc. is selling for $80 and offers these payoffs next year: Boom Normal economy Recession Required: Stock Dividend Price $ 8 $240 4 90 0 0 Calculate the expected rate of return and standard deviation of a portfolio half invested in Escapist and half in Leaning Tower of Pita. All three economic scenarios are equally likely to occur. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Expected return 42.50 % Standard deviation %
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
Problem 8P
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