6. (10 points) You are considering buying a share of stock in a firm that has...
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6. (10 points) You are considering buying a share of stock in a firm that has the following two possible payoffs with the corresponding probability of occurring. The stock has a purchase price of $50.00. You forecast the alternatives as follows: a) There is a 40% chance that the stock will sell for $70 at the end of one year. b) There is a 60% chance that the stock will sell for $30 at the end of one year. What is the expected percentage return on this stock, and what is the standard deviation of returns on this stock? 6. (10 points) You are considering buying a share of stock in a firm that has the following two possible payoffs with the corresponding probability of occurring. The stock has a purchase price of $50.00. You forecast the alternatives as follows: a) There is a 40% chance that the stock will sell for $70 at the end of one year. b) There is a 60% chance that the stock will sell for $30 at the end of one year. What is the expected percentage return on this stock, and what is the standard deviation of returns on this stock?
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Related Book For
Fundamental financial accounting concepts
ISBN: 978-0078025365
8th edition
Authors: Thomas P. Edmonds, Frances M. Mcnair, Philip R. Olds, Edward
Posted Date:
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