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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
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 | 0.4 | $ | 6 | $ | 200 | ||
Normal economy | 0.4 | 2 | 116 | ||||
Recession | 0.2 | 0 | 0 | ||||
The company goes out of business if a recession hits. Calculate the expected rate of return and standard deviation of return to Leaning Tower of Pita share-holders. The stock is selling today for $95. (Round your answers to 2 decimal places.)
Expected rate of return % | |
Standard deviation % |
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