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Expedia Inc. is traded on NASDAQ and Red Lion Hotels is traded on NYSE. Sarah Forsyth owns shares in both companies. She wants to estimate
Expedia Inc. is traded on NASDAQ and Red Lion Hotels is traded on NYSE. Sarah Forsyth owns shares in both companies. She wants to estimate what her expected return and risk for each stock will be for next year.
Expedia Red Lion Hotels
Possible Return Probability Possible Return Probability
20% 20% -15% 20%
30% 50% 20% 50%
40% 30% 60% 30%
a) Which stock is likely to give her a better return? Which stock is riskier? (show your calculations). 5pts
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