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please show all work including any formulas and explanations 2. Delta Airlines is reporting its first quarter earnings next Wednesday April 15th before the market
please show all work including any formulas and explanations
2. Delta Airlines is reporting its first quarter earnings next Wednesday April 15th before the market open. As such, Walker is forecasting DAL's one-week return, assuming that he is holding DAL today until Wed 4-15. Given the coronavirus crisis, Walker estimates that there is 10% chance that DAL will beat analysts' forecast. In this case, DAL will experience a 15% increase in return. On the other hand, there is 50% chance that DAL will meet the forecast and experience a 5% increase in return. If DAL's earnings are worse than expected and the company misses analysts' estimates, the stock will experience a 12% drop. In such case, Walker estimates that the likelihood to missing analysts' estimates is 40%. Calculate the expected risk (via standard deviation) and return (via mean or expected return) for Delta Airlines given the above pay off and probability Step by Step Solution
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