Question
Suppose you observe the following situation: Rate of Return if State Occurs State of Probability of Economy State Stock A Stock B Bust 0.25 0.12
| Suppose you observe the following situation: |
|
| Rate of Return if State Occurs | ||||||||
| State of | Probability of | ||||||||
| Economy | State | Stock A | Stock B | ||||||
| Bust |
| 0.25 |
| 0.12 |
| 0.10 |
| ||
| Normal |
| 0.45 |
|
| 0.09 |
|
| 0.09 |
|
| Boom |
| 0.30 |
|
| 0.44 |
|
| 0.24 |
|
|
| Calculate the expected return on each stock. (Round your answers to 2 decimal places. (e.g., 32.16)) |
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Introduction to Finance Markets, Investments and Financial Management
Authors: Ronald W. Melicher, Edgar A. Norton
16th edition
1119398282, 978-1-119-3211, 1119321115, 978-1119398288
