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Security Returns If State Occurs State of Probability of Economy State of Economy Roll Ross Bust .40 -16 % 17 % Boom .60 16 7
Security Returns If State Occurs | |||||||||||
State of | Probability of | ||||||||||
Economy | State of Economy | Roll | Ross | ||||||||
Bust | .40 | -16 | % | 17 | % | ||||||
Boom | .60 | 16 | 7 | ||||||||
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 amounts should be indicated by a minus sign. Round your Economy and E(R) answer to 2 decimal and Product answer 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 | % | % | |||||||
Boom | % | % | |||||||
E(R) = | % | E(R) = | % |
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