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Security Returns if State Occurs State of Economy Bust Boom Probability of State of Economy Roll Ross .40 .60 -10% 28 21% 8 Calculate

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Security Returns if State Occurs State of Economy Bust Boom Probability of State of Economy Roll Ross .40 .60 -10% 28 21% 8 Calculate the expected returns for Roll and Ross by filling in the following table (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Calculate the product using the decimal value of the probability and the percentage value of the return. Input all of your answers as a percent rounded to 2 decimal places.) Roll Ross State of Economy Probability of State of Economy Bust .40 Return If State Occurs -10% Product Return If State Occurs Product % 21 % % Boom .60 28 % E(R)= % 8% % 12.80 % E(R)= 13.20 %

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