Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A stock has an expected rate of return of 19.55%. The rate of return for this stock is 18% if the state of the economy

A stock has an expected rate of return of 19.55%. The rate of return for this stock is 18% if the state of the economy is recession, 17% if the state of the economy is normal, and 25% if the state of the economy is expansion. The probability for each state of the economy is 15%, 55%, and 30%, respectively. What is the variance for this stock?

Round to 5 decimal places

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Public Finance A Contemporary Application Of Theory To Policy

Authors: David N Hyman

12th Edition

0357442156, 978-0357442159

More Books

Students also viewed these Finance questions

Question

Define and discuss the nature of communication

Answered: 1 week ago

Question

Define and discuss the nature of culture

Answered: 1 week ago