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The stock of Business Adventures sells for $54 a share. Its likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows: Dividend Stock price

The stock of Business Adventures sells for $54 a share. Its likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows:

  Dividend Stock price
Boom $ 2.00 $ 64
Normal economy 1.00 57
Recession 0.50 48
 

Required:

(a)

Calculate the expected holding-period return and standard deviation of the holding-period return. All three scenarios are equally likely. (Round your answers to 2 decimal places. Omit the "%" sign in your response.)

Expected return %
Standard deviation %
(b)

Calculate the expected return and standard deviation of a portfolio invested half in Business Adventures and half in Treasury bills. The return on bills is 11%. (Round your answers to 2 decimal places. Omit the "%" sign in your response.)

Expected return %
Standard deviation %

Jul 03 2021 View more View Less

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