Question: QUESTION 1 1. EXPECTED RETURN: A stocks returns have the following distribution: Economy Probability of This Economy Occurring Rate of Return if This Economy Occurs

QUESTION 1

  1. 1. EXPECTED RETURN: A stocks returns have the following distribution:

    Economy Probability of This Economy Occurring Rate of Return if This Economy Occurs

    Weak 0.1 -30%

    Below average 0.1 -14%

    Average 0.3 11%

    Above average 0.3 20%

    Strong 0.2 45%

    1.0

    The stocks expected return is

    a. 13.50%

    b. 13.70%

    c. 13.80%

    d. 13.90%

    e. 13.97%

QUESTION 2

  1. 2. From problem 1, what is the standard deviation?

    a. 17.54%

    b. 21.86%

    c. 23.71%

    d. 26.93%

    e. 28.19%

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