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The stock of Business Adventures sells for $50 a share. Its likely dividend payout and end-of-year price depend on the state of the economy by
The stock of Business Adventures sells for $50 a share. Its likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows:
Dividend | Stock Price | |
Boom | 3.00 | 58 |
Normal economy | 1.40 | 52 |
Recession | 0.70 | 43 |
(Calculated on first question)
Expected Return = 5.40%
Standard Deviation = 14.16%
A. Calculate the expected return and standard deviation of a portfolio invested half in Business Adventures and half in Treasury bills. The return on bills is 3%.
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