Problem 1

You are considering an investment in XYZ Co. using the following information. What is the standard deviation ofXYZ's stock?

State of the Economy	Probability	Expected Return
Recession	.15	-5%
Steady	.45	10%
Boom	?	35%

Problem 2

You are considering buying one of the following stocks:

Stock	A	C	E
E(R)	32.00%	20.00%	36.00%
????	11.80%	5.60%	13.50%

Which stock should you buy? Why?

Problem 3

Salah bought a stock for $55 per share and sold it for $65 after 18 months as well as he received $4.0 as cash divided during the period. Samir bought a bond for 9 months; his holding period return was 15%. Which investor makes higherrate of return?