4. You are considering an investment in XYZ stock for one year. Suppose your expectations regarding...
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4. You are considering an investment in XYZ stock for one year. Suppose your expectations regarding the stock price and the associated expected returns at the end of one year are as follows: State of the Market Probability Boom 0.35 Normal growth Recession 0.30 0.35 Ending Price Expected Holding Period Return $140 110 80 44.5% 14.0 -16.5 a. Compute the expected return and standard deviation of XYZ stock. b. You have another alternative investment option, ABC stock, whose expected return is 18%. Which stock would you choose, XYZ or ABC? 4. You are considering an investment in XYZ stock for one year. Suppose your expectations regarding the stock price and the associated expected returns at the end of one year are as follows: State of the Market Probability Boom 0.35 Normal growth Recession 0.30 0.35 Ending Price Expected Holding Period Return $140 110 80 44.5% 14.0 -16.5 a. Compute the expected return and standard deviation of XYZ stock. b. You have another alternative investment option, ABC stock, whose expected return is 18%. Which stock would you choose, XYZ or ABC?
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Financial Analysis with Microsoft Excel
ISBN: 978-1285432274
7th edition
Authors: Timothy R. Mayes, Todd M. Shank
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