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You are conducting the research on the stock of Business Adventures and obtain the following information...

You are conducting the research on the stock of Business Adventures and obtain the following information about the status of the economy and corresponding probabilities and the holding period returns for different economic conditions:

Probability HPR
Boom 20% 30%
Normal 50% 10%
Recession 30% -13.75%

Calculate the expected return and standard deviation of the holding period return.

Expected return= (round your answer to the fourth decimal. e.g. if your answer is 1.11%, you should input 0.0111)

Standard deviation= (round your answer to the fourth decimal. e.g. if your answer is 1.11%, you should input 0.0111)

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Answer #1

A D 1 B С Prob HPR 20% 30% 50% 10% 30% -13.75% 2 Boom 3 Normal 4 Recession 5 6 Expected return 7 Expected SD 0.0688 SUMPRODUCAll formulas and solutions are in excel itself

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