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Ex 1. Suppose that your estimates of the possible one-year returns from investing in the com- mon stock of the A. A. Eye-Eye Corporation were

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Ex 1. Suppose that your estimates of the possible one-year returns from investing in the com- mon stock of the A. A. Eye-Eye Corporation were as follows: Probability of occurrence Possible return .. What are the expected return and standard deviation? b. Assume that the parameters that you just determined under Parta) pertain to a normal probability distribution. What is the probability that return will be zero or less? Less than 10 percent? More than 40 percent? (Assume a normal distribution.) Ex 2. Jerome J. Jerome is considering investing in a security that has the following distribution of possible one-year returns Probability of occurrence Possible return 0.10 -0.10 0.20 0.00 0.30 0.10 0.30 0.20 0.10 0.30 Ex 3. Summer Storme is analyzing an investment. The expected one-year return on the invest- ment is 20 percent. The probability distribution of possible returns is approximately normal with a standard deviation of 15 percent. a. What are the chances that the investment will result in a negative return? b. What is the probability that the return will be greater than 10 percent? 20 percent? 30 percent? 40 percent? 50 percent

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