Find the expected quarterly return

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Question: Suppose that the time step is taken to be three months, τ = 1/4, and the quarterly returns K(1), K(2), K(3), K(4) are independent and identically distributed. Find the expected quarterly return E(K(1)) and the expected annual return E(K(0, 4)) if the expected return E(K(0, 3)) over three quarters is 12%.

Reference no: EM131637864

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