Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You purchase 100 common shares in a publicly traded company at $13.26 a share. You forecast four possible future economic conditions. Based on economic forecasts,

image text in transcribed
You purchase 100 common shares in a publicly traded company at $13.26 a share. You forecast four possible future economic conditions. Based on economic forecasts, you estimate that there is 10% probability of an economic boom, a 40% chance of normal economic conditions, 30% probability of an economic slowdown, and a 20% possibility of a recession. You expect the company to generate a 25% return during economic booms, 16% during normal conditions, 5% during economic slowdowns, and (6%) during recessions A) Calculate your expected return on the stock (nearest 1/100 of one percent without % symbol, e.g. 6.98)? B) Calculate the standard deviation for the stock (nearest 1/100 of one percent without % symbol, e.g. 6.98)

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

Step: 3

blur-text-image

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

Unclaimed Property A Reporting Process And Audit Survival Guide

Authors: Tracey L. Reid

1st Edition

0470278242, 978-0470278246

More Books

Students also viewed these Accounting questions