Question
You expect the following set of possible outcomes for a stock: Outcome Probability Ending Stock Price Holding Period Return (Percent) Risk-free rate (Percent) Good 35%
You expect the following set of possible outcomes for a stock:
| Outcome | Probability | Ending Stock Price | Holding Period Return (Percent) | Risk-free rate (Percent) |
| Good | 35% | $120 | 44.5 | 4 |
| Neutral | 30% | $100 | 14 | 2 |
| Bad | 35% | $70 | -16.5 | .5 |
What is the average (expected value) of its holding period return? Please enter your answer in percent rounded to the nearest basis point.
Do on excel please
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Economics
Authors: Zvi Bodie, Robert C Merton, David Cleeton
2nd Edition
0558785751, 9780558785758
