A stock will provide a rate of return of either 20 or 30 a If both possibilities are equally likely, calculate the expected return and standard deviation b If Treasury bills yield 5 , and investors believe that the stock offers a satisfactory expected return, what must be the market risk of the sto...

a Expected return 5 20 5 30 5 Standard deviation 5 20 5 2 5 30 5 2 12 25 The ...

A stock will provide a rate of return of either - 20% or + 30%. a. If

Question:

A stock will provide a rate of return of either - 20% or + 30%.
a. If both possibilities are equally likely, calculate the and standard deviation.
b. If Treasury bills yield 5%, and investors believe that the stock offers a satisfactory what must be the market risk of the stock?
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...