Going back to Table 11.3 in Example 11.1, what are the variances on our two stocks once
Question:
Going back to Table 11.3 in Example 11.1, what are the variances on our two stocks once we have unequal probabilities? What are the standard deviations?
Table 11.3
Transcribed Image Text:
Calculating Expected Returns Starcents (3) Return if ****** Economy State of Economy State Occurs (2) × (3) State Occurs (2) × (5) -20% 24% 70 2 E(R) = 26% (1) State of Recession Boom (2) Probability of .80 20 1.00 (4) Product -16% 14 E(R) = -2% (5) Return if 30% Jpod 10 (6) Product
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Converting all returns to decimals we can summarize the needed calculations as follows Based on t...View the full answer
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Related Book For
Fundamentals Of Investments Valuation And Management
ISBN: 9781266824012
10th Edition
Authors: Bradford Jordan, Thomas Miller, Steve Dolvin
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