The Korean stock market this year can be extremely bad, bad, good, or extremely good. The...
The Korean stock market this year can be extremely bad, bad,
good, or extremely good. The
following table shows the probabilities and the stock returns
corresponding to the four states of
the market. What is the expected return of KOSPI this year?
| Extremely Bad | Bad | Good | Extremely good | |
| Probability | .05 | 0.35 | .45 | .15 |
| KOSPI | -20% | -4% | 12% | 30% |
1) 5.5%
2) 6.5%
3) 7.5%
4) 8.5%
5) 9.5%
Homework Answers
![C13 VfB13*A13 12 Return (r) Probability (P(r)] Expecte return [rxP(r)- u] 1.00% 1.40% 5.40% 4.50% 20.00% -4.00% 12.00% 30.00% 13 0.05 0.35 0.45 0.15 17 18 Expected returın 7.5%](http://img.homeworklib.com/questions/4b1ea0b0-45b3-11ea-b8b4-71f71dd0a5a3.png?x-oss-process=image/resize,w_560)
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