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Security Returns If State Occurs State of Probability of Economy State of Economy Roll Ross Bust .60 -11 % 19 % Boom .40 26 6
Security Returns If State Occurs | |||||||||||
State of | Probability of | ||||||||||
Economy | State of Economy | Roll | Ross | ||||||||
Bust | .60 | -11 | % | 19 | % | ||||||
Boom | .40 | 26 | 6 | ||||||||
Calculate the expected returns for Roll and Ross by filling in the following table (verify your answer by expressing returns as percentages as well as decimals): (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round your E(R) answers to 2 decimal places and your Product answers to 4 decimal places. Omit the "%" sign in your response.) |
Roll | Ross | ||||||||||
State of Economy | Probability of State of Economy | Return If State Occurs | Product | Return if State Occurs | Product | ||||||
Bust | .60 | % | % | ||||||||
Boom | .40 | % | % | ||||||||
E(R) = | % | E(R) = | % | ||||||||
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