Question: Problem 11-4 Expected Returns (LO1, CFA1) Security Returns if State Occurs State of Economy Probability of State of Economy Roll Ross Bust .20 13 %

Problem 11-4 Expected Returns (LO1, CFA1)

		Security Returns if State Occurs
State of Economy	Probability of State of Economy	Roll		Ross
Bust	.20	13	%	17	%
Boom	.80	24		6

Calculate the expected returns for Roll and Ross by filling in the following table: (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Calculate the product using the decimal value of the probability and the percentage value of the return. Input all your answers as a percent rounded to 2 decimal places.)

		Roll				Ross
State of Economy	Probability of State of Economy	Return if State Occurs		Product		Return if State Occurs		Product
Bust	.20	-13.00	%		%	17	%		%
Boom	.80	24	%		%	6	%		%
		E(R) =		16.60	%	E(R) =		8.20	%

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