The return on shares of Valley Transporter is predicted under the following various economic conditions: Recession -0.13...

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The return on shares of Valley Transporter is predicted under the following various economic conditions: Recession -0.13...

The return on shares of Valley Transporter is predicted under the following various economic conditions:
Recession -0.13
Normal +0.09
Boom +0.22
If each economy state has the same probability of occurring, what is the variance of the stock

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Answer 1

Answer #1

Expected Return = (-0.13+0.09+0.22)/3 = 0.06

Variance = (1/3)*(-0.13-0.06)² + (1/3)*(0.09-0.06)² +(1/3)*(0.22-0.06)² = 0.02087 or 2.09%

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Answer 2

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The return on shares of Valley Transporter is predicted under the following various economic conditions: Recession -0.13...

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