Business Finance: Problem 8.01(Expected Return)

1. Problem 8.01 (Expected Return) eBook A stock's returns have the following distribution: Demand for the Company's Products Probability of this Demand Occurring 0.1 Rate of Return if this Demand Occurs Weak (44%) Below average 0.1 (10) Average 0.3 16 0.3 24 Above average Strong 0.2 49 1.0 Assume the risk-free rate is 4%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places. Stock's expected return: % Standard deviation: % Coefficient of variation: Sharpe ratio: Problem Walk-Through