A stock's return has the following distribution: Calculate the stock's expected return and standard deviation. Scenario Probability Return Weak 0.1 -20% below average 0.2 -5% average 0.4 16% above average 0.1 25% strong 0.2 60% r= 4.40%, and std.dev = 26.96% Or= 13.84%, and std.dev = 18.62% Or= 11.40%, and std.dev = 26.69% Or= 14.40%, and std.dev = 20.62%

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter3: Risk And Return: Part Ii
Section: Chapter Questions
Problem 1P: The standard deviation of stock returns for Stock A is 40%. The standard deviation of the market...
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A stock's return has the following distribution:
Calculate the stock's expected return and standard deviation.
Scenario
Probability
Return
Weak
0.1
-20%
below average
0.2
-5%
average
0.4
16%
above average
0.1
25%
strong
0.2
60%
r= 4.40%, and std.dev = 26.96%
Or= 13.84%, and std.dev = 18.62%
Or= 11.40%, and std.dev = 26.69%
Or= 14.40%, and std.dev = 20.62%
Transcribed Image Text:A stock's return has the following distribution: Calculate the stock's expected return and standard deviation. Scenario Probability Return Weak 0.1 -20% below average 0.2 -5% average 0.4 16% above average 0.1 25% strong 0.2 60% r= 4.40%, and std.dev = 26.96% Or= 13.84%, and std.dev = 18.62% Or= 11.40%, and std.dev = 26.69% Or= 14.40%, and std.dev = 20.62%
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