Expected Returns and Deviations Repeat Questions 1 and 2 assuming that all three states are equally likely.
Use the following information on states of the economy and stock returns to answer Questions 4 7.
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Security Returns |
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if State Occurs |
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State of |
Probability of State |
Roll |
Ross |
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Economy |
of Economy |
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Bust |
0.3 |
10% |
40% |
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Boom |
0.7 |
50 |
10 |
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1 |
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