Question

In: Finance

The stock of Business Adventures sells for $60 a share. Its likely dividend payout and end-of-year...

The stock of Business Adventures sells for $60 a share. Its likely dividend payout and end-of-year price depend on

the state of the economy by the end of the year as follows:

Dividend Stock price
  Boom $2.00     $73      
  Normal economy 1.50     63      
  Recession .70     59   

Calculate the standard deviation of the holding-period return. All three scenarios are equally likely.

(Do not round intermediate calculations. Round your answer to 4 decimal places)

Standard deviation?

Solutions

Expert Solution

Holding period return = (dividend + (ending value - starting value))/starting value

Dividend Ending Value Ending value - Starting value HPR (HPR - Avg. HPR)^2
  Boom $2.00     $73       $13 25.00% 205.44
  Normal economy $1.50     63       $3 7.50% 56.25
  Recession $0.70     59 -$1 -0.50% 0.25

Average HPR = (25% + 7.5% - 0.50%)/3 ; = 10.67%

ST Dev. = (Sum of [(HPR - Avg. HPR)^2]/n)^0.5

= (264.94/3)^0.5

= 9.39%

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

The stock of Business Adventures sells for $60 a share. Its likely dividend payout and end-of-year...
The stock of Business Adventures sells for $60 a share. Its likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows:    Dividend Stock price   Boom $2.00     $73         Normal economy 1.50     63         Recession 0.70     59       Calculate the expected holding-period return. All three scenarios are equally likely. (Do not round intermediate calculations. Round your answer to 4 decimal places) Expected return? Use 0.01 Instead...
The stock of Business Adventures sells for $60 a share. Its likely dividend payout and end-of-year...
The stock of Business Adventures sells for $60 a share. Its likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows: Dividend Stock Price Boom $2.00 $70 Normal economy 1.80 63 Recession 0.90 54 a. Calculate the expected holding-period return and standard deviation of the holding-period return. All three scenarios are equally likely. (Do not round intermediate calculations. Round your answers to 2 decimal places.) b. Calculate the expected...
The stock of Business Adventures sells for $60 a share. Its likely dividend payout and end-of-year...
The stock of Business Adventures sells for $60 a share. Its likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows: Dividend Stock Price Boom $2.00 $73 Normal economy 1.50 63 Recession 0.70 59 a. Calculate the expected holding-period return and standard deviation of the holding-period return. All three scenarios are equally likely. (Do not round intermediate calculations. Round your answers to 2 decimal places.) b. Calculate the expected...
The stock of Business Adventures sells for $40 a share. Its likely dividend payout and end-of-year...
The stock of Business Adventures sells for $40 a share. Its likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows: Dividend Stock Price Boom $2.00 $52 Normal economy 1.40 44 Recession .70 34 a. Calculate the expected holding-period return and standard deviation of the holding-period return. All three scenarios are equally likely. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Expected return % Standard...
The stock of Business Adventures sells for $55 a share. Its likely dividend payout and end-of-year...
The stock of Business Adventures sells for $55 a share. Its likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows: Dividend Stock Price Boom $2.10 $65 Normal economy 1.40 58 Recession 0.50 49 a. Calculate the expected holding-period return and standard deviation of the holding-period return. All three scenarios are equally likely. (Do not round intermediate calculations. Round your answers to 2 decimal places.) b. Calculate the expected...
The stock of Business Adventures sells for $80 a share. Its likely dividend payout and end-of-year...
The stock of Business Adventures sells for $80 a share. Its likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows: Stock Price Dividend Recession $76 $0.75 Normal economy    82    2.50 Boom    87    3.00 Calculate the expected return and standard deviation of a portfolio invested half in Business Adventures and half in Treasury bills. The return on bills is 3%.
The stock of Business Adventures sells for $50 a share. Its likely dividend payout and end-of-year...
The stock of Business Adventures sells for $50 a share. Its likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows: [(boom $2.00 dividend $58 stock price),(normal economy $2 dividend and $54 stock price) (recession $0.50 dividend and $39.5 stock price)] Calculate the expected holding period return and standard deviation of the holding period return, the boom and normal economy states are 40% likely to happen. calculate the expected...
The stock of Business Adventures sells for $80 a share. Its likely dividend payout and end-of-year...
The stock of Business Adventures sells for $80 a share. Its likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows: Stock Price Dividend Recession $76 $0.75 Normal economy 82 2.50 Boom 87 3.00 Calculate the expected holding-period return and standard deviation of the holding-period return. All three scenarios are equally likely.
The stock of Business Adventures sells for $35 a share. Its likely dividend payout and end-of-year...
The stock of Business Adventures sells for $35 a share. Its likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows:    Dividend Stock price   Boom $1.20     $45         Normal economy 1.20     38         Recession .60     26       a. Calculate the expected holding-period return and standard deviation of the holding-period return. All three scenarios are equally likely. (Do not round intermediate calculations. Round your answers to...
The stock of Business Adventures sells for $65 a share. Its likely dividend payout and end-of-year...
The stock of Business Adventures sells for $65 a share. Its likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows:     Dividend Stock price   Boom $2.40     $73         Normal economy 1.60     66         Recession .85     57       a. Calculate the expected holding-period return and standard deviation of the holding-period return. All three scenarios are equally likely. (Do not round intermediate calculations. Round your answers to...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT