Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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You live in a world where three future states are possible: Boom, Normal and Recession. See the probablities of these states in the attched table. Consider a stock which you expected to have the following returns
in these states of the economy.
State Probability
Boom
Normal
Recession
O 6.52%
οιοιοι
What is the standard deviation of returns on an investment in this stock?
6.37%
○ 4.62%
25%
55%
20%
O 7.17%
State
Expected
Return
0.15
0.08
-0.04
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Transcribed Image Text:You live in a world where three future states are possible: Boom, Normal and Recession. See the probablities of these states in the attched table. Consider a stock which you expected to have the following returns in these states of the economy. State Probability Boom Normal Recession O 6.52% οιοιοι What is the standard deviation of returns on an investment in this stock? 6.37% ○ 4.62% 25% 55% 20% O 7.17% State Expected Return 0.15 0.08 -0.04
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