Holding Period Returns

The stock of Lee Corp. sells at $$40$ a share. Its likely dividend payout and end$-$of$-$year price

depend on the state of the economy by the end of the year as follows:

a$.$ Calculate the expected holding period return and standard deviation of the holding period

return. All three scenarios are equally likely.

b$.$ Calculate the expected return and standard deviation of a portfolio invested half in Lee

Corp. and half in Treasury bills. The return on T bills is $4\%.$