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1.] Consider the following probability distribution of returns for Alpha Corporation: (5 each) Current Stock Price Return 40% Stock Price in One Year $35 $25
1.] Consider the following probability distribution of returns for Alpha Corporation: (5 each) Current Stock Price Return 40% Stock Price in One Year $35 $25 $20 Probability 25% 50% 25% $25 0% -20% a.) Compute the expected return for Alpha Corporation. (show work) b.) Compute the variance of the return on Alpha Corporation. (show work) c.) Compute the standard deviation of the return on Alpha Corporation. (show work) d.) Suppose we compare the distributions of Alpha Corporation's price and the stock market index. Current Stock Stock Price in One Return on Price Return Probability Market Index $35 40% 25% 30% $25 $25 0% 50% 3.333% $20 -20% 25% -10% Year Given the information in the table and a one-year riskless interest rate of 10%, explain and estimate the beta of Alpha Corporation stock
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