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  3. a stock’s returns have the following distributio

A stock’s returns have the following distribution: State of the Economy Probability of State Occurring Stock's Expected Return Boom 0.45 25% Normal 0.5 15% Recession 0.05 5% Calculate...

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Question

Finance

  1. A stock’s returns have the following distribution:

State of the Economy

Probability of State Occurring

Stock's Expected Return

Boom

0.45

25%

Normal

0.5

15%

Recession

0.05

5%

  1. Calculate the stock’s expected return (5)
  2. Calculate the stock’s standard deviation (12)
  3. Calculate the stock’s coefficient of variation (3).

Answer & Explanation Solved by verified expert
3.6 Ratings (650 Votes)
Solution a The stocks expected Return 19 b The stocks standard    See Answer
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Transcribed Image Text

A stock’s returns have the following distribution:State of the EconomyProbability of State OccurringStock's Expected ReturnBoom0.4525%Normal0.515%Recession0.055%Calculate the stock’s expected return (5)Calculate the stock’s standard deviation (12)Calculate the stock’s coefficient of variation (3).

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