Purchase Solution

Expected Return and Standard Deviation

Not what you're looking for?

Ask Custom Question

Distribution of rates of return on stock is as follows:
State of Economy Probability of State Occurring Stock Return %

Depression 0.1 -4.5
Recession 0.2 4.4
Normal 0.5 12.0
Boom 0.2 20.7

a. What is expected return on stock?
b. What is the standard deviation of returns on the stock?

Purchase this Solution

Solution Summary

The solution explains the calculation of expected return and standard deviation of a stock. The probability of state occurring and stock returns are examined.

Solution Preview

a. The expected returns are the sum of the probability X the stock return.
Expected return = 0.1X-4.5% + 0.2 X 4.4% + 0.5 X 12.0% X 0.2 ...

Purchase this Solution


Free BrainMass Quizzes
Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Introduction to Finance

This quiz test introductory finance topics.

Basics of corporate finance

These questions will test you on your knowledge of finance.

Operations Management

This quiz tests a student's knowledge about Operations Management