Question
A stock is expected to produce: 30% in boom (p=0.05), 9% in normal (p=0.75), -33% in recession. What is the E(R)? - I know that
A stock is expected to produce: 30% in boom (p=0.05), 9% in normal (p=0.75), -33% in recession. What is the E(R)?
- I know that the answer is 1.65, but I do not know how to get to that answer. I do not know how to calculate it without the p of recession. So far i got the following:
E(R) = (.30*.05)+(.09*.75)+____________
Please help and show steps!
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Property Finance
Authors: Giacomo Morri, Antonio Mazza
1st Edition
1118764404, 978-1118764404
