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The returns on the common stock of Cycles, Inc. are quite cyclical. In a boom economy,...

The returns on the common stock of Cycles, Inc. are quite cyclical. In a boom economy, the stock is expected to return 30 percent in comparison to 12 percent in a normal economy and a negative 20 percent in a recessionary period. The probability of a recession is 30 percent, while the probability of a boom is 5 percent. The probability that the economy will be at normal levels is 65 percent. Assume you have already calculated the Expected Return on this stock as 3.33% or .0333. What is the standard deviation of the return on this stock?

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jeff jeffy answered 2 years ago
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