The common stock of Manchester & Moore is expected to earn 14 percent in a recession, 7
percent in a normal economy, and lose 4 percent in a booming economy. The probability of a
boom is 15 percent while the probability of a recession is 5 percent. What is the expected rate of
return on this stock?
a. What is the expected rate of return on this stock?
5.7%
b. What is the variance of the returns on this stock?
0.001891
c. What is the standard deviation of the returns on this stock?
4.35%
Please check my answers and show work typed no excel or grid style please as I am on mobile.
The common stock of Manchester & Moore is expected to earn 14 percent in a recession,...
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