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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