Question
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
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 $15.00. You forcast that there is a 30% chance that the stock will sell for $30.00 at the end of one year. The alternative expectation is that there is a 70% chance that the stock will sell for $10.00 at the end of one year. What is the expected percentage return on this stock, and what is the return variance? I've figured the Return on this stock to be 6.67. How do I get the return variance? Please put step by step
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