Question: A B C D E F. H I -2.00% 12.00% 6.00% 1 Demonstration of beta: 2 3 Stock Mkt Amazon 4 Economy Probability Return Return

A B C D E F. H I -2.00% 12.00% 6.00%

A B C D E F. H I -2.00% 12.00% 6.00% 1 Demonstration of beta: 2 3 Stock Mkt Amazon 4 Economy Probability Return Return 5 Recession 20% -5% -10% 6 Normal 60% 15% 20% 7 Boom 20% 25% 30% 8 9 10 The expected return on Amazon stock is: 11 12 The standard deviation risk of Amazon stock is: 13 The standard deviation risk of the stock market (Question 2) was: 14 15 Amazon's stock's Beta is: 16 17 Explain in words how Amazon compares to the market (risk and return). 18 16.00% 16.0% 19 20 4

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