Question
A stock will provide a rate of return of either 29% or +34%. a. If both possibilities are equally likely, calculate the expected return and
| A stock will provide a rate of return of either 29% or +34%. |
| a. | If both possibilities are equally likely, calculate the expected return and standard deviation.(Do not round intermediate calculations. Round your answers to 1 decimal place.) |
| Expected return | % |
| Standard deviation | % |
| b. | If Treasury bills yield 2.5% and investors believe that the stock offers a satisfactory expected return, what must the market risk of the stock be? |
| Market risk | % |
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Financial Management for Public, Health and Not-for-Profit Organizations
Authors: Steven A. Finkler, Daniel L. Smith, Thad D. Calabrese, Robert M. Purtell
5th edition
1506326846, 9781506326863, 1506326862, 978-1506326849
