contestada

You recently purchased a stock that is expected to earn 30 percent in a booming economy, 9 percent in a normal economy, and lose 33 percent in a recessionary economy. there is a 5 percent probability of a boom and a 75 percent chance of a normal economy. what is your expected rate of return on this stock?

Respuesta :

jcherry99
Took me a bit to understand what this is. I have no business sense at all.

Expected Rate of Return = 30%*5% + 9%*75% - 33% * (100 - 75 -5)%
Expected Rate of Return = 0.015 + 0.0675 - 33%*20%
Expected Rate of Return = 0.015 + 0.0675 - 0.066
Expected Rate of Return = 0.0165

This then is expressed as a %
0.0165 = 1.65 % Sounds like you are buying a US short term treasury.
If anyone else answers, take their answer.
 

Otras preguntas