Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The returns on the common stock of Cycles, Inc. are quite cyclical. In a boom economy, the stock is expected to return 30 percent in

The returns on the common stock of Cycles, Inc. are quite cyclical. In a boom economy, the stock is expected to return 30 percent in comparison to 12 percent in a normal economy and a negative 20 percent in a recessionary period. The probability of a recession is 30 percent, while the probability of a boom is 5 percent. The probability that the economy will be at normal levels is 65 percent. Assume you have already calculated the Expected Return on this stock as 3.33% or .0333. What is the standard deviation of the return on this stock?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cases In Healthcare Finance

Authors: Louis C. Gapenski

3rd Edition

1567932444, 9781567932447

More Books

Students also viewed these Finance questions

Question

=+a) Write the null and alternative hypotheses.

Answered: 1 week ago

Question

3. How does nonverbal communication express cultural values?

Answered: 1 week ago

Question

2. What types of nonverbal behavior have scholars identifi ed?

Answered: 1 week ago