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QUESTION 28 After some study of the economy, your forecast for next year is that a boom economy has a 30% chance of occurring, a
QUESTION 28 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 33% in a boom economy next year, 16% in a neutral economy, and -11% in a bust economy. The risk-free rate is 4.3%. What is the standard deviation of expected returns for this stock next year? (Answer to the nearest tenth of a percent, but do not use a percent sign). Probability Return Boom Economy Neutral Economy Bust Economy 30% 50% 20% 33% 16% -11% Risk-Free Rate = 4.3%
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