The stock of Business Adventures sells for $40 a share Its likely dividend payout and end of year price depend on the state of the economy by the end of the year as follows Dividend Stock Price Boom $2 00 $50 Normal economy 1 00 43 Recession 0 50 34 a Calculate the expected holding period return an...

We use the below equation to calculate the holding per ...

The stock of Business Adventures sells for $40 a share. Its likely dividend payout and end-of-year price

Question:

The stock of Business Adventures sells for $40 a share. Its likely payout and end-of-year price depend on the state of the economy by the end of the year as follows:
____________________ ____________ Stock Price
Boom ......................... $2.00 ......................... $50
Normal economy ............ 1.00 ........................... 43
Recession ..................... 0.50 ........................... 34
a. Calculate the expected holding-period return and standard deviation of the holding period return. All three scenarios are equally likely.
b. Calculate the and standard deviation of a invested half in Business Adventures and half in Treasury bills. The return on bills is 4%.
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...