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The stock of Business Adventures sells for $40 a share. Its likely dividend payout and end-of-year...

The stock of Business Adventures sells for $40 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 $52
Normal economy 1.40 44
Recession 0.70 34

a. Calculate the expected holding-period return and standard deviation of the holding-period return. All three scenarios are equally likely. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

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 3%. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

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Answer #1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

SHOWN ALL FORMULAS. NO EXCEL FUNCTION IS USED2 * = ENG 06-04 01-02-2020 24 HI35 - HC HO HE HE HG HH HI HI HK HL HM HN - BUSINESS ADVENTURE ECONOMY PROB (P1+D1-PO)/PO EXPE

2 * = ENG 06-04 01-02-2020 24 HI58 2 HC HD HEHE HG HH H H HK HL HM HN ECONOMY с EXPECTED PROB HPR в 0.333333 3 5.00 0.333333

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