A stock will provide a rate of return of either 18 or 26 a If both possibilities are equally likely, calculate the stock 's expected return and standard deviation b If Treasury bills yield 4 and investors believe that the stock offers a satisfactory expected return, what must the market risk of the...

a The expected rate of return on the stock is 4 The standard ...

A stock will provide a rate of return of either -18% or +26%. a. If both possibilities

Question:

A stock will provide a rate of return of either -18% or +26%.
a. If both possibilities are equally likely, calculate the stock's and standard deviation.
b. If Treasury bills yield 4% and investors believe that the stock offers a satisfactory what must the market risk of the stock be?
Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...