Question
Question 1 (20 points): XYZ Corps equity has the following returns: Scenario Probability Return Boom 30% 16% Normal 45% 11% Bust 25% 8% a.5 points:
Question 1 (20 points): XYZ Corps equity has the following returns:
| Scenario | Probability | Return |
|---|---|---|
| Boom | 30% | 16% |
| Normal | 45% | 11% |
| Bust | 25% | 8% |
a.5 points: What is XYZs arithmetic mean return?
b. 7 points: What is XYZs return variance?
c.8 points: Carol has a coefficient of risk aversion of 3.6. What return would a riskless asset have to offer for her to be indifferent between investing her money in XYZ and investing it in this riskless asset?
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Governmental and Nonprofit Accounting
Authors: Robert Freeman, Craig Shoulders, Gregory Allison, Robert Smi
10th edition
132751267, 978-0132751261
