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14. only 13. USE THIS INFORMATION TO ANSWER THE NEXT TWO QUESTIONS: The common stock of Leaning Tower of Pita Inc. will generate payoffs to
14. only
13. USE THIS INFORMATION TO ANSWER THE NEXT TWO QUESTIONS: The common stock of Leaning Tower of Pita Inc. will generate payoffs to investors next year, which depend on the state of the economy, as follows: The company goes out of business if a recession hits. The probability of a Recession is 40%, assume that the other two possible states are equally likely. The stock is selling today for $75. What is the expected rate of return? a. 22% b. 16% c. 18% d. 20% e. 24% 14. What is the standard deviation of returns to Leaning Tower of Pita shareholders? a. 68.1% b. 76.1% c. 67.7% d. 71.8% e. 64.4% Step by Step Solution
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