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Security Returns if State of Economy Bust Probability of State of Economy State Occurs Roll Ross Boom 0.50 0.50 -12% 25 18% 6 Calculate

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Security Returns if State of Economy Bust Probability of State of Economy State Occurs Roll Ross Boom 0.50 0.50 -12% 25 18% 6 Calculate the expected returns for Roll and Ross by filling in the following table: Note: 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 your answers as a percent rounded to 2 decimal places. State of Economy Probability of State of Economy Bust 0.50 Boom 0.50 Roll Ross Return if State Occurs Product Return if State Occurs Product -12 % % 18 % % 25 % % 6% % E(R) = 6.50 % E(R) = 12.00 %

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