Question
In: Finance
Calculate the expected standard deviation on stock: State of the economy Probability of the states Percentage...
Calculate the expected standard deviation on stock:
| State of the economy | Probability of the states | Percentage returns | |
|---|---|---|---|
| Economic recession | 21% | 0% | |
| Steady economic growth | 26% | 5% | |
| Boom | Please calculate it | 17% |
Solutions
Expert Solution
Solution :
The expected return on the stock = 10.31 %
The expected Standard Deviation on the stock = 7.3057 %
= 7.31 % ( when rounded off to two decimal places )
The probability of Boom State = 100 % - Probability of Economic recession - Probability of Steady economic growth
= 100 % - 21 % - 26 % = 53 %
Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.
jeff jeffy answered 4 months agoRelated Solutions
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