You live in a world where three future states are possible: Boom, Normal and Recession. See the probablities of these states in the attched table. Consider a stock which you expected to have the following returns in these states of the economy. State Probability Return 2.79 25% Normal 55% Recession 20% -0.04 What is the standard deviation of returns on an investment in this stock? Boom O 6.52% 6.37% 4.62% State 7.17% Expected 0.15 0.08

You live in a world where three future states are possible: Boom, Normal and Recession. See the probablities of these states in the attched table. Consider a stock which you expected to have the following returns in these states of the economy. State Probability Return 2.79 25% Normal 55% Recession 20% -0.04 What is the standard deviation of returns on an investment in this stock? Boom O 6.52% 6.37% 4.62% State 7.17% Expected 0.15 0.08

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 1P

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