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A stocks returns have the following distribution


A stock's returns have the following distribution


Demand for the             Probability of This       Rate of Return If This
Company’s Products    Demand Occurring      Demand Occurs


Weak                                                   0.1                   (50 %)
Below average                                     0.2                  (5)
Average                                               0.4                   16
Above Average                                    0.2                   25
Strong                                                  0.1                   60
                                                             1.0

Calculate the stock's expected return, standard deviation, and coefficient of variation. 11.4 may be the answer


SOLUTION PREVIEW
rˆ = (0.1) (-50%) + (0.2)(-5%) + (0.4)(16%) + (0.2)(25%) + (0.1)(60%)


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