Question
The common stock of Escapist Films sells for $30 a share and offers the following payoffs next year: Probability Dividend Stock Price Boom 0.3 $0
The common stock of Escapist Films sells for $30 a share and offers the following payoffs next year:
Probability | Dividend | Stock Price | |
Boom | 0.3 | $0 | $23 |
Normal economy | 0.5 | 3 | 31 |
Recession | 0.2 | 8 | 39 |
Calculate the expected return and standard deviation of Escapist. (Do not round your intermediate calculations and round your final answers to 2 decimal places. Use the minus sign for negative numbers if it is necessary.)
Expected rate of return % | |
Standard deviation % |
The common stock of Leaning Tower of Pita, Inc., a restaurant chain, will generate the following payoffs to investors next year:
Probability | Dividend | Stock Price | |
Boom | 0.3 | $5 | $200 |
Normal economy | 0.5 | 3 | 105 |
Recession | 0.2 | 0 | 0 |
The stock is selling today for $95.
Calculate the expected return and standard deviation of a portfolio half invested in Escapist and half in Leaning Tower of Pita. (Do not round your intermediate calculations and round your final answers to 2 decimal places. Use the minus sign for negative numbers if it is necessary.)
Expected return of portfolio % | |
Standard deviation of portfolio % |
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