Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The common stock of Escapist Films sells for $25 a share and offers the following payoffs next year: Dividend Stock Price Boom 0 $20 Normal
The common stock of Escapist Films sells for $25 a share and offers the following payoffs next year: |
Dividend | Stock Price | |
Boom | 0 | $20 |
Normal economy | $1 | 28 |
Recession | 3 | 30 |
All three scenarios are equally likely. |
a. | Calculate the expected return of Escapist.(Negative values should be indicated by a minus sign.) |
Expected Return | |
Boom | % |
Normal economy | % |
Recession | % |
b. | Calculate the standard deviation of Escapist.(Do not round intermediate calculations. Round your answer to 2 decimal places.) |
Standard deviation | % |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started