Answered: What is the expected return for the…

What is the expected return for the following stock? State Probability Return Average 50 .25 Recession 35 .05 Depression .15 -35 Select one: Оа.0.12 O b.o.05 Ос.О.10 O d.o.09 Oe.o.11

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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Question

What is the expected return for the following stock?
State
Probability Return
Average
50
.25
Recession
35
.05
Depression
.15
-35
Select one:
Оа.0.12
O b.o.05
Ос.О.10
O d.o.09
Oe.o.11

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A 133.
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Consider the following information: Economy Recession Normal Boom Probability of State of Economy .21 .56 .23 Rate of Return if State Occurs Stock A Stock B a. Expected return of A Expected return of B b. Standard deviation of A Standard deviation of B .015 .095 .250 a. Calculate the expected return for the two stocks. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. -.36 .26 .49 b. Calculate the standard deviation for the two stocks. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. % % %
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7

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