A stock will have a loss of 12.5 percent in a recession, a return of 11.2 percent
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Question:
A stock will have a loss of 12.5 percent in a recession, a return of 11.2 percent in a normal economy, and a return of 25.9 percent in a boom. There is 22 percent probability of a recession, 47 percent probability of normal economy, and 31 percent probability of boom. What is the standard deviation of the stock's returns?
a)13.79%
b)19.01%
c)12.64%
d)11.82%
e)10.34%
Related Book For
Fundamentals of Financial Management
ISBN: 978-0324302691
11th edition
Authors: Eugene F. Brigham, ? Joel F. Houston
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