Question
Questions 13-15 are based on the following information. Leftover stock is expected to return 26 percent in a boom, 4 percent in a normal economy,
Questions 13-15 are based on the following information. Leftover stock is expected to return 26 percent in a boom, 4 percent in a normal economy, and lose 25 percent in a recession. The probabilities of a boom, normal economy, and a recession are 2 percent, 93 percent, and 5 percent, respectively. 13. What is the expected return on this stock? a. 3.99 percent b. 2.99 percent c. 1.99 percent d. 0.99 percent 14. What is the variance on this stock? a. 0.005071 b. 0.004927 c. 0.003896 d. 0.005001 15. What is the standard deviation of the returns on this stock? a. 7.19 percent b. 7.12 percent c. 7.24 percent d. 7.04 percent
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