second question: Below are the probability distribution and returns for Company A and Company B....
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second question: Below are the probability distribution and returns for Company A and Company B. (3 marks) Economic situation Probability of occurrence Company A returns Company B returns
Depression 0.25 0.14 0.55
natural 0.5 0.23 0.15
flourish 0.25 0.10 -0.15
Required : Calculate earnings per share. Calculate risk for each stock using appropriate metrics. If the correlation between the returns of Company A and the Al-Quds Index (1) and the correlation between the returns of Company B and Al-Quds Index (- 0.9) and the standard deviation of the market portfolio is 0.25, calculate the beta of each share and what is the decision taken.
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