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Question 6 (28 marks) The current stock price for Beta Corporation is at $30 per share. Consider the following probability distribution of stock price and
Question 6 (28 marks) The current stock price for Beta Corporation is at $30 per share. Consider the following probability distribution of stock price and dividend for Beta Corporation: Dividend Stock Price in One Year Probability 25% $5 $35 $5 $28 50% $5 $20 25% a) Suppose you buy 100 shares of the stock in Beta Corporation, calculate the expected return rate for the investment. (7 marks) b) Calculate the standard deviation of the return rate for the stock in Beta Corporation. (9 marks) ci) Calculate the coefficient of variation for the stock in Beta Corporation. (5 marks) cii) Suppose the return rate for Alpha Limited is 3% and the standard deviation of the return rate for Alpha Limited is 2%. Compare the relative dispersion between the stock of Beta Corporation and the stock of Alpha Limited. (7 marks)
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