1. You just bought 100 shares of ABC Inc. at $100 per share. ABC paid out a dividend just before you bought the share and will pay a dividend of $2 per share with certainty. The price of ABC a year from now, after ABC has paid out the dividend, is, however, uncertain and depends on the state of the economy. A year from now the economy will either be in a recession, a state of "normal" growth, or a boom with probabilities of 30%, 40%, and 30% respectively. After analyzing ABC you determine that the price of ABC a year from now in these various states of the economy will be :

What is the expected return over the next year on your investment in ABC? What is the standard deviation of the return?

Answer rating: 100% (QA)

Expected Return and Standard Deviation of Your Investment in ABC Based on the information youve prov... View the full answer