Question: Suppose security C is expected to be worth $800 if the economy is weak and $300 if the economy is strong in one year (with

Suppose security C is expected to be worth $800 if the economy is weak and $300 if the economy is strong in one year (with equal probabilities). Currently, the price of the security is $500.

Compute possible rates of return for the security over the coming year.

Compute expected rate of return of the security

Find range for possible values o returns

Suppose that on average returns of other risky securities in the market fluctuate in the range of 25% around their respective means. Based on your answer in c) should security C be considered more/less risky than the average?

Think again is security C more/less risky than the average?

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