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A stock will provide a rate of return of either 20% or +30%. a. If both possibilities are equally likely, calculate the expected return and
A stock will provide a rate of return of either 20% or +30%. |
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 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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