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draw the timeline showing the known and unknown variables A stocks expected return has the following distribution: Outcome Probability Return Recession 25% -30% Expansion 40%

draw the timeline showing the known and unknown variables

A stocks expected return has the following distribution:

Outcome

Probability

Return

Recession

25%

-30%

Expansion

40%

15%

Boom

35%

55%

  1. What is the stocks expected return?

  1. What is the standard deviation of expected return?

  1. Interpret your result. How do you explain the relationship between the expected return and the standard deviation of expected return of this investment? [(Assume a normal probability distribution and the return is within + one standard deviation of the expected return)]

Use 2-decimal places in your calculation

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