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Question 1 & 2 please
1. Make up an example that shows your understanding of the difference between total holding period return and capital gain. (2 marks) Jerome purchases a property worth $500 000 today. Based on his estimates, the property could be worth $650 000 next year with probability 0.3, $520 000 with probability 0.2 and $450 000 with probability 0.5. Rent is expected to be $21 000 for the year. Calculate the expected return and standard deviation of returns as % correct to 2 decimal places. (5 marks) 2.
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