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Determining the expected return on stock

Distribution of rates of return on stock is as follows:

State of Economy Probability of State Occurring Stock Return %

Depression 0.1 -4.5
Recession 0.2 4.4
Normal 0.5 12.0
Boom 0.2 20.7

Q1. What is expected return on stock?

Q2. What is the standard deviation of returns on the stock?

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Determining the expected return on stock

Reference No:- TGS01451780

Have a Question? (oR Write a Review)

Recent Questions Asked Finance Basics

Q : Noncontrolling interest concepts

Q : Estimating the affordable mortgage

Q : Business risk-financial risk-portfolio risk

Q : Balance sheet-statement of cash flow

Q : Determining the expected return on stock

Q : Communicating negative variances to management

Q : How a given investor chooses an optimal portfolio

Q : Expectations and efficient markets

Q : Short-term investment in stock securities

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Determining the expected return on stock

Reference No:- TGS01451780

Recent Questions Asked Finance Basics

Q : Noncontrolling interest concepts

Q : Estimating the affordable mortgage

Q : Business risk-financial risk-portfolio risk

Q : Balance sheet-statement of cash flow

Q : Determining the expected return on stock

Q : Communicating negative variances to management

Q : How a given investor chooses an optimal portfolio

Q : Expectations and efficient markets

Q : Short-term investment in stock securities

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