Question: Question 5 ( 25 points) A stock can either return 10% in recession or a +20% when the economy is doing well. If both possibilities

Question 5 ( 25 points) A stock can either return 10%

Question 5 ( 25 points) A stock can either return 10% in recession or a +20% when the economy is doing well. If both possibilities are equally likely what is the expected return and standard deviation. If the T.Bill rate is 5% and investors conlude that that the stock is neither overpriced or underpriced )priced right), what must be the market risk of the stock. Explain

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