Question

In: Finance

(Expected return and risk) The following data represend returns for the common stocks over a one-year period.

(Expected return and risk) The following data represend returns for the common stocks over a one-year period.

 

The mean (expected) return of Google is _______%. (Keep the sign and two decimal numbers.)

Solutions

Expert Solution

Mean expected return of Google -

P1*ER1+ P2*ER2+...Pn*ERn

Probability - P

Expected return - ER

= (0.1 *-0.2)+(0.2*0.08)+(0.2*0.34)+(0.3*-0.18)+(0.2*0.04)

=-0.02+0.016+0.068-0.054+0.008

=0.058 =5.8%

Mean expected return for Google is 5.8%


Mean expected return for Google is 5.8%

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