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6. (10 points) You are considering buying a share of stock in a firm that has the following two possible payoffs with the corresponding
6. (10 points) You are considering buying a share of stock in a firm that has the following two possible payoffs with the corresponding probability of occurring. The stock has a purchase price of $50.00. You forecast the alternatives as follows: a) There is a 40% chance that the stock will sell for $70 at the end of one year. b) There is a 60% chance that the stock will sell for $30 at the end of one year. What is the expected percentage return on this stock, and what is the standard deviation of returns on this stock?
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Fundamental financial accounting concepts
Authors: Thomas P. Edmonds, Frances M. Mcnair, Philip R. Olds, Edward
8th edition
978-007802536, 9780077648831, 0078025362, 77648838, 978-0078025365
