chap. 5 q 1

The stock of Business Adventures sells for $60 a share. Its likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows: Dividend Stock Price Boom $2.00 $73 Normal economy 1.50 63 Recession .70 59 a. Calculate the expected holding-period return and standard deviation of the holding-period return. All three scenarios are equally likely. (Do not round Intermediate calculatic answers to 2 decimal places.) Expected return Standard deviation % b. Calculate the expected return and standard deviation of a portfolio invested half in Business Adventures and half in Treasury bills. The return on bills is 4%. (Do not round inte calculations. Round your answers to 2 decimal places.) Expected return Standard deviation %