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QUESTION 25 After some study of the economy your forecast for next year is that a boom economy has a 30% chance of occurring a
QUESTION 25 After some study of the economy your forecast for next year is that a boom economy has a 30% chance of occurring a neutral economy 50% and a bust economy a 20% chance of occurring. You also estimate that a certain stock would have a return of 34%in a boom economy next year. 1 %, in a neutral economy and-13%in a bust economy. The risk-free rate is 4.5%. What is the expected return for this stock next year? (Answer to the nearest tenth of a percent, but do not use a percent sign) Probability Return 30% 50% 20% Boom Economy Neutral Economy Bust Economy 34% 18% -1396 Risk-Free-Rate-45% QUESTION 26 After some study of the economy your forecast for next year is that a boom economy has a 30% chance of occurring a neutral economy 50%, and a bust economy a 20% chance of occurring. You also estimate that a certain stock would have afeturn of 30% n a boom economy next year, 18% in a neutral economy. and-13% in a bust economy. The risk-free rate is 4.2%, what is the expected risk premium for this stock next nearest tenth of a percent, but do not use a percent sign) Probability Boom Economy Neutral Economy Bust Economy 30% 50% 20% 30% 18% 13% Risk-Free Rate : 4 2%
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