Question
A stock has an expected rate of return of 13.5%. The rate of return for this stock is 9% if the state of the economy
A stock has an expected rate of return of 13.5%. The rate of return for this stock is 9% if the state of the economy is recession, 14% if the state of the economy is normal, and 18% if the state of the economy is expansion. The probability for each state of the economy is 30%, 45%, and 25%, respectively. What is the variance for this stock?
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
13th edition
978-1285027371, 128502737X, 978-1133541141
