Question
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 | 0.35 | $ | 9 | $ | 192 | ||
| Normal economy | 0.55 | 5 | 119 | ||||
| Recession | 0.1 | 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 $98. (Round your answers to 2 decimal places.)
| 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 | 0.35 | $ | 9 | $ | 192 | ||
| Normal economy | 0.55 | 5 | 119 | ||||
| Recession | 0.1 | 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 $98. (Round your answers to 2 decimal places.)
| Expected rate of return % | |
| Standard deviation % |
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Contemporary Business Mathematics with Canadian Applications
Authors: S. A. Hummelbrunner, Kelly Halliday, K. Suzanne Coombs
10th edition
133052311, 978-0133052312
