Assume an investor has $100 and stock ABC is priced $8, and the risk-free offer zero return. Stock ABC can go up by 100% or down by 50% with probability .5. The investment period is three periods ahead.

What is the standard deviation of terminal wealth if the investor always allocates 50% of her wealth on the stock ABC?

Select one:

150

• 87
• 45
• 200

Answer rating: 100% (QA)

45 At 50 terminal wealth will be 10050 150 This will occur if there ... View the full answer