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4 (10 MARKS) Cabar Ltd has just been listed on the Johannesburg Securities Exchange and has no return record. An investor has thus predicted the
4 (10 MARKS) Cabar Ltd has just been listed on the Johannesburg Securities Exchange and has no return record. An investor has thus predicted the following conditional returns: State of economy Probability Return Boom 5% 35% Good 15% 20% Normal 60% 12% Bad 15% 1% Recession 5% -15% REQUIRED: 4.1 What is his expected (average) return in the next period? (5 marks) 4.2 What is the variance and standard deviation of this return? (5 marks) END
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