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An investor buys 1 share of Quinjett Ltd at the price of $40 on December 1, 2019. The firm is not expected to pay any
An investor buys 1 share of Quinjett Ltd at the price of $40 on December 1, 2019. The firm is not expected to pay any dividends. Consider the following four possible scenarios for the share price on December 1, 2020:
- $55 with a probability of 10%
- $46 with a probability of 55%
- $34 with a probability of 25%
- $27 with a probability of 10%
a) Calculate the expected return for holding the share for a year. (2 marks)
b) Calculate the variance of return and standard deviation of return. (3 marks)
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