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You are interested in buying a stock that has a price of $250. You have projected the following probabilities: Probability .10 .20 .35 .20

You are interested in buying a stock that has a price of ( $ 250 ). You have projected the following probabilities: Answer

You are interested in buying a stock that has a price of $250. You have projected the following probabilities: Probability .10 .20 .35 .20 .10 .05 Stock Price (in time 1) 430 320 270 220 130 40 Answer the following (showing all work): (a) what is the expected return on the stock if you buy today and sell next year? (b) what is the expected standard deviation of the stock?

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