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Problem #2 (11 Marks) The common stock of Big Time Toys (BTT) is expected to generate the following payoffs to investors next year: Probability Dividend

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Problem #2 (11 Marks) The common stock of Big Time Toys (BTT) is expected to generate the following payoffs to investors next year: Probability Dividend Stock Price Boom 0.3 $5 $195 Normal economy 0.5 2 100 Recession 0.2 0 0 The company is expected to go out of business if there is a recession. Calculate the expected return and standard deviation of return to BTT shareholders. The stock is selling today for $93

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