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Security Returns if State Occurs State of Economy Probability of State of Economy Roll Ross Bust 0.60 17 % 13 % Boom 0.40 20 5

Security Returns if State Occurs
State of Economy Probability of State of Economy Roll Ross
Bust 0.60 17 % 13 %
Boom 0.40 20 5

Calculate the expected returns for Roll and Ross by filling in the following table:

Roll Ross
State of Economy Probability of State of Economy Return if State Occurs Product Return if State Occurs Product
Bust 0.60 (17) % % 13 % %
Boom 0.40 20 % % 5 % %
E(R)= (2.20) % E(R)=s 9.80 %

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