Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A stock has the following probability distribution: If economy is good ( the probability is 2 5 % ) , its expected stock return is

A stock has the following probability distribution: If economy is good (the probability is 25%), its expected stock return is 11%; if economy is on average (the probability is 50%), its expected stock return is 5%; if economy is bad (the probability is 25%), its expected return is 1%. Find the expected rate of return for the stock.

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

Authors: Steven G. Medema, Carl Sumner Shoup

1st Edition

0202307859, 978-0202307855

More Books

Students also viewed these Finance questions

Question

1. Keep a reasonable distance.

Answered: 1 week ago

Question

Describe the linkages between HRM and strategy formulation. page 80

Answered: 1 week ago