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note please show working ( no Excel) and thank you. QUESTION 4 A stock's expected return has the following distribution: Outcome Probability Return Recession 25%
note please show working ( no Excel) and thank you.
QUESTION 4 A stock's expected return has the following distribution: Outcome Probability Return Recession 25% -30% Expansion 40% 15% Boom 35% 55% a) What is the stock's expected return? (2 marks) b) What is the standard deviation of expected return? (5 marks) c) Interpret your result. How do you explain the relationship between the expected return and the standard deviation of expected return of this investment? [(Assume a normal probability distribution and the return is within + one standard deviation of the expected return)] Use 2-decimal places in your calculation. (1 mark) [Total: 8 marks)Step by Step Solution
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