Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Problem 2-5 Expected Return: Discrete Distribution A stock's return has the following distribution: Demand for the Company's Products Probability of This Demand Occurring Rate of

Problem 2-5 Expected Return: Discrete Distribution

A stock's return has the following distribution:

Demand for the Company's Products Probability of This Demand Occurring Rate of Return if This Demand Occurs (%)
Weak 0.1 -45%
Below average 0.2 -8
Average 0.4 11
Above average 0.2 20
Strong 0.1 75
1.0

Calculate the stock's expected return. Round your answer to two decimal places. %

Calculate the standard deviation. Round your answer to two decimal places. %

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cash Flow Stock Investing

Authors: Randall Stewart

1st Edition

1980883300, 978-1980883302

More Books

Students also viewed these Finance questions