3. (2.5 pts.) The stock of Business Adventures sells for $100 per share. Its likely dividend payout and end-of year price depend on the state of the economy by the end of the year as follows: Boom Normal economy Recession a. Dividend $2.00 $1.00 $0.00 Probability of Scenario 0.5 0.25 0.25 Stock Price $150 $115 $84 (1 pts.) Calculate the expected holding period return and standard deviation of the holding-period return. Var(en) = P(s)[r(s) - Ecr)] Boom: R=P-Po+D, Po b. (1.5 pts.) Calculate the expected return and standard deviation of a complete portfolio invested 60% in Business Adventures and 40% in Treasury bills. The return on the T-bill is 3%.

3. (2.5 pts.) The stock of Business Adventures sells for $100 per share. Its likely dividend payout and end-of year price depend on the state of the economy by the end of the year as follows: a. (4 pts.) Calculate the expected holding period refurn and standard deviation of the holding-period return. (4Pss.)CalculatetheexpectedholdingperiodreturnandstandarddVer(n+N)=P(s)[r(s)E(r)]2Boom:R=P0P1P0+D1 b. (1.5 pts.) Calculate the expected return and standard deviation of a complete portfolio invested 60% in Business Adventures and 40% in Treasury bills. The return on the T-bill is 3%