I just need help for part B of the first picture
Chapter 11 Introduction to Risk, Return, and the Opportunity Cost of Cap a. Calculate the expected return and standard deviation of Escapist. All three scarios 359 Boom Normal economy Recession Dividend $0 1 3 Stock Price $18 26 34 equally likely b. Now calculate the expected return and standard deviation of a portfolio hall invested in Escapist and half in Leaning Tower ein heiras Corea problemu 19. Show that the portfolio stan dard deviation is lower than that of either stock. Explain why this happen dallation Incent Searnerind mit (LO11-2) 15. Scenario Analysis and Portfolio Risk. The common stock of Leaning Tower of Pita Inc. restaurant chain, will generate payoffs to investors next year, which depend on the state of economy, as follows: (LO11-2 and LO11-3) Dividend $8 4 Boom Normal economy Recession Stock Price $240 90 0 0 a. The company goes out of business if a recession hits. Calculate the expected rate of and standard deviation of return to Leaning Tower of Pita shareholders. Assume for sing ity that the three possible states of the economy are equally likely. The stock is selling for $80. b. Who would view the stock of Leaning Tower of Pita as a risk-reducing investment owner of a gambling casino or a successful bankruptcy lawyer? Explain. 16. Scenario Analysis. The common stock of Escapist Films sells for $25 a share and offen following payoffs next year: (LO11-3) Chapter 11 Introduction to Risk, Return, and the Opportunity Cost of Capital 359 Stock Price Boom Normal economy Recession Dividend $0 1 $18 26 34 3 a. Calculate the expected return and standard deviation of Escapist. All three scenarios are equally likely b. Now calculate the expected return and standard deviation of a portfolio half invested in Escapist and half in Leaning Tower of Pita (from Problem 15). Show that the portfolio stan- dard deviation is lower than that of either stock. Explain why this happens. (LO11-2) 15. Scenario Analysis and Portfolio Risk. The common stock of Leaning Tower of Pita Inc., a restaurant chain, will generate payoffs to investors next year, which depend on the state of the economy, as follows: (LO11-2 and LO11-3) Dividend 0 0 Stock Price Boom $8 $240 Normal economy 4 90 Recession a. The company goes out of business if a recession hits. Calculate the expected rate of return and standard deviation of return to Leaning Tower of Pita shareholders. Assume for simplic- ity that the three possible states of the economy are equally likely. The stock is selling today for $80. 6. Who would view the stock of Leaning Tower of Pita as a risk-reducing investmentthe owner of a gambling casino or a successful bankruptcy lawyer? Explain. 16. Scenario Analysis. The common stock of Escapist Films sells for $25 a share and offers the following payoffs next year: (LO11-3) Chapter 11 Introduction to Risk, Return, and the Opportunity Cost of Cap a. Calculate the expected return and standard deviation of Escapist. All three scarios 359 Boom Normal economy Recession Dividend $0 1 3 Stock Price $18 26 34 equally likely b. Now calculate the expected return and standard deviation of a portfolio hall invested in Escapist and half in Leaning Tower ein heiras Corea problemu 19. Show that the portfolio stan dard deviation is lower than that of either stock. Explain why this happen dallation Incent Searnerind mit (LO11-2) 15. Scenario Analysis and Portfolio Risk. The common stock of Leaning Tower of Pita Inc. restaurant chain, will generate payoffs to investors next year, which depend on the state of economy, as follows: (LO11-2 and LO11-3) Dividend $8 4 Boom Normal economy Recession Stock Price $240 90 0 0 a. The company goes out of business if a recession hits. Calculate the expected rate of and standard deviation of return to Leaning Tower of Pita shareholders. Assume for sing ity that the three possible states of the economy are equally likely. The stock is selling for $80. b. Who would view the stock of Leaning Tower of Pita as a risk-reducing investment owner of a gambling casino or a successful bankruptcy lawyer? Explain. 16. Scenario Analysis. The common stock of Escapist Films sells for $25 a share and offen following payoffs next year: (LO11-3) Chapter 11 Introduction to Risk, Return, and the Opportunity Cost of Capital 359 Stock Price Boom Normal economy Recession Dividend $0 1 $18 26 34 3 a. Calculate the expected return and standard deviation of Escapist. All three scenarios are equally likely b. Now calculate the expected return and standard deviation of a portfolio half invested in Escapist and half in Leaning Tower of Pita (from Problem 15). Show that the portfolio stan- dard deviation is lower than that of either stock. Explain why this happens. (LO11-2) 15. Scenario Analysis and Portfolio Risk. The common stock of Leaning Tower of Pita Inc., a restaurant chain, will generate payoffs to investors next year, which depend on the state of the economy, as follows: (LO11-2 and LO11-3) Dividend 0 0 Stock Price Boom $8 $240 Normal economy 4 90 Recession a. The company goes out of business if a recession hits. Calculate the expected rate of return and standard deviation of return to Leaning Tower of Pita shareholders. Assume for simplic- ity that the three possible states of the economy are equally likely. The stock is selling today for $80. 6. Who would view the stock of Leaning Tower of Pita as a risk-reducing investmentthe owner of a gambling casino or a successful bankruptcy lawyer? Explain. 16. Scenario Analysis. The common stock of Escapist Films sells for $25 a share and offers the following payoffs next year: (LO11-3)
