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The stock of X Ltd. Performs well relative to other stocks during recessionary period. The stock of Y Ltd., on the other hand, does
The stock of X Ltd. Performs well relative to other stocks during recessionary period. The stock of Y Ltd., on the other hand, does well during growth periods. Both the stocks are currently selling for Rs.100 per share. You assess the rupee return (dividend plus price) of these stocks for the next year as follows. Economic Condition High growth Low growth Stagnation Probability 0.3 0.4 Return on X's stock 100 110 Return on Y's stock 150 130 Calculate the expected return and standard deviation of investing. A. Rs.1000 in the equity stock of X Ltd. [1 mark] B. Rs.1000 in the equity stock of Y Ltd. [1 mark] C. Rs.500 each in the equity stock of X Ltd. and Y Ltd. [3 Marks] 0.2 120 90 Recession 01 140 60
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