A stock’s returns have the following distribution: State of the Economy Probability of State Occurring Stock's Expected Return Boom 0.45 25% Normal 0.5 15% Recession 0.05 5% Calculate...

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Finance

A stock’s returns have the following distribution:
State of the Economy
Probability of State Occurring
Stock's Expected Return
Boom
0.45
25%
Normal
0.5
15%
Recession
0.05
5%
Calculate the stock’s expected return (5)
Calculate the stock’s standard deviation (12)
Calculate the stock’s coefficient of variation (3).

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Solution a The stocks expected Return 19 b The stocks standard See Answer

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A stock’s returns have the following distribution:State of the EconomyProbability of State OccurringStock's Expected ReturnBoom0.4525%Normal0.515%Recession0.055%Calculate the stock’s expected return (5)Calculate the stock’s standard deviation (12)Calculate the stock’s coefficient of variation (3).

State of the Economy	Probability of State Occurring	Stock's Expected Return
Boom	0.45	25%
Normal	0.5	15%
Recession	0.05	5%