On Monday the stock price of APPL dropped by 26% and ended the trading day at a price of P₀ = $237.76. In this problem, you will estimate the expected 1-year return and volatility for APPL.

Consider the following model for the stock price of APPL. In the good scenario, the price of APPL in February of 2023 will have bounced back to the price the day before the crash. That is, P₁(g) = $323.00. In the bad scenario, Meta will continue to lose value and the stock price is P₁(b) = $200.00. Suppose that these two outcomes are equally likely and that Meta pays no dividends (there is no neutral scenario in this model).

a) What is the implied expected return?