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July 4, 2015

Homework Help: Finance

Posted by Margaret on Tuesday, June 4, 2013 at 11:58am.

Calculate the return and standard deviation for the following stock, in an economy with five possible states. If a Boom (Probability=25%) economy occurs, then the expected return is 30%. If a Good (Probability=25%) economy occurs, then the expected return is 15%. If a Normal (Probability=20%) economy occurs, then the expected return is 8%. If a Bad (Probability=20%) economy occurs, then the expected return is 5%. If a Recession (Probability=10%) economy occurs, then the expected return is -15%. Show your work for partial credit.

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