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Scenario Analysis. The common stock of Escapist Films sells for $ 2 5 a share and offers the following payoffs next year: ( LO 1
Scenario Analysis. The common stock of Escapist Films sells for $ a share and offers the following payoffs next year: LO Dividend Stock Price $ Boom S Normal economy Recession a Calculate the expected return and standard deviation of Escapist. All three scenarios are equally likely. b Now calculate the expected return and standard deviation of a portfolio half invested in Escapist and half in Leaning Tower of Pita from Problem Show that the portfolio standard deviation is lower than that of either stock. Explain why this happens.
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