Solution-Calculate the expected holding-period return

Calculate the expected holding-period return

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Reference no: EM131434755

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	1.60	62
Recession	.80	52

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 deviation	%

b. 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 4%. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Expected return	%
Standard deviation	%

Reference no: EM131434755

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Calculate the expected holding-period return

Reference no: EM131434755

Reference no: EM131434755

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