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E(r) prob(s)xr(s) o(r)2 = prob(s)[r(s) - E(r)]2 x r s S 2 Scenario Analysis Estimate the future return and risk measures STD(r) = ? Jo(r)2 = AAPL sells for $150 a share today. Its likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows. Scenarios Dividend Stock Price HPR Boom $4.00 $200 (likelihood=1/4) Normal economy 1.00 1X3 (likelihood=1/2) Recession 0.20 10Y (likelihood=1/4) What is the expected holding-period return for AAPL from today to the end of the year? What is the standard deviation of the holding-period return for AAPL from today to the end of the year? . E(r) prob(s)xr(s) o(r)2 = prob(s)[r(s) - E(r)]2 x r s S 2 Scenario Analysis Estimate the future return and risk measures STD(r) = ? Jo(r)2 = AAPL sells for $150 a share today. Its likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows. Scenarios Dividend Stock Price HPR Boom $4.00 $200 (likelihood=1/4) Normal economy 1.00 1X3 (likelihood=1/2) Recession 0.20 10Y (likelihood=1/4) What is the expected holding-period return for AAPL from today to the end of the year? What is the standard deviation of the holding-period return for AAPL from today to the end of the year

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