Calculate the expected holding-period return

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Reference no: EM132209102

Question - The stock of Business Adventures sells for $35 a share. It's 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	$2.50	$43
Normal economy	2.00	40
Recession	.85	31

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

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 3%.

Reference no: EM132209102

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