Home / Questions / The stock of Business Adventures sells for $54 a share. Its likely dividend payout and end...
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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 | ||
| Boom | $ 2.00 | $ 64 | |
| Normal economy | 1.00 | 57 | |
| Recession | 0.50 | 48 | |
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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 | % |
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