Question
The rate of return on the common stock of a company is expected to be 15.25% in a boom economy, 10.25% in a normal economy,
The rate of return on the common stock of a company is expected to be 15.25% in a boom economy, 10.25% in a normal economy, and only 4.75% in a recessionary economy. The probabilities of these economic states are 37.0% for a boom, 36.0% for a normal economy, and 27.0% for a recession. What is the variance of the returns on the common stock of the company?
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International Financial Management
Authors: Geert Bekaert, Robert J. Hodrick
2nd edition
013299755X, 132162768, 9780132997553, 978-0132162760
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