After studying the economy, you forecast that there is a 70% chance of a good economy next
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After studying the economy, you forecast that there is a 70% chance of a good economy next year and a 30% chance of a poor economy. If the economy is good, you estimate that a stock you have been following would have a 19% return. Likewise, if the economy is poor, you estimate a -7% return for that same stock. The risk-free rate is 4.3%. What is the standard deviation of the expected returns for this stock? (Answer to the nearest tenth of a percent, but do not use a percent sign). Probability Return Good Economy 70% 19% Poor Economy 30% -7% Risk-Free Rate = 4.3
Related Book For
Mathematical Statistics With Applications In R
ISBN: 9780124171138
2nd Edition
Authors: Chris P. Tsokos, K.M. Ramachandran
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