Question
A company faces the following probability distribution: State of the Economy Probability of this State Occurring (p i ) Rate of Return if this State
A company faces the following probability distribution:
| State of the Economy | Probability of this State Occurring (pi) | Rate of Return if this State Occurs (ki) |
| Boom | 0.2 | 16% |
| Normal | 0.6 | 12% |
| Recession | 0.2 | 8% |
What is the standard deviation (STDEV) and the coefficient of variation (CV) on the company's stock?
| a | STDEV = 2.53% and CV = 0.21 |
| b | STDEV = 5.66% and CV = 2.12 |
| c | STDEV = 2.53% and CV = 4.74 |
| d | STDEV = 6.40% and CV = 0.53 |
| e | STDEV = 5.66% and CV = 0.47 |
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Introduction To Finance
Authors: Lawrence J Gitman, Jeff Madura
1st Edition
0201635372, 9780201635379
