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1. Calculate the probability-weighted expected standard deviation for the stock below. State of the Economy Probability Expected Return on Stock Good 0.7 24% Bad 0.2

1. Calculate the probability-weighted expected standard deviation for the stock below.

State of the Economy

Probability

Expected Return on Stock

Good

0.7

24%

Bad

0.2

5%

Ugly

0.1

-10%

2. Using the information below and an initial purchase of 100 shares: Calculate the after-tax time-weighted return, given a dividend tax rate of 15% and a capital gains tax rate of 20%.

Date

$ Dividend per share

Market Price when Dividend Received

1/1

$30

3/31

$0.60

$32

6/30

$0.60

$33

9/30

$0.60

$35

12/31

$0.60

$35

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