Consider the following information:

6a)

State i	Probability of State i	Actual Return of Johnson and Johnson
Boom	84 %	15 %
Bust	16 %	-8 %

What is the variance of Johnson and Johnson? (Round to 6 decimals) (Remember Variance is not in percentage terms!)

Answer:

6b)

Consider the following information:

State i	Probability of State i	Actual Return of Johnson and Johnson
Boom	84 %	15 %
Bust	16 %	-8 %

What is the standard deviation of Johnson and Johnson? (Answer as a percentage) (Round to 2 decimals)

Answer:

6c)

You are considering buying some share in The Luther Corporation as part of your retirement account. First, you want to calculate the expected return for Luther Corp's stock to see if it meets your very high standards. You have estimate the for Luther Corp to be 1.94, the risk free rate in the market to be 3 %, and the expected return on the market to be 14. What is the expected return for Luther Corp? (Answer in Percentage terms and Round to 2 decimals)

Answer: