A stock’s returns have the following distribution: Probability Stock Return 0.15 –11% 0.70 18% 0.15 51%...
A stock’s returns have the following distribution:
|
Probability |
Stock Return |
|
|
|
|
0.70 |
18% |
|
0.15 |
51% |
Calculate the stock’s expected return.
| a. |
21.90% |
|
| b. |
18.00% |
|
| c. |
20.00% |
|
| d. |
18.60% |
|
| e. |
19.33% |
Homework Answers
Expected return = Sum of probability * stock return
= 0.15 * -11% + 0.7 * 18% + 0.15 * 51%
= 18.60%
hence choose d)
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A stock’s returns have the following distribution:
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51%...
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