Jackson Corporation

# Jackson Corporation - 0.45 28 Find the expected return k...

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Jackson Corporation    State of      Probability         Expected  Economy                     (P)  Return Recession         0.25                      12%   Normal             0.50    20%     Boom               0.25    40%  Find the expected return ( k ) and the  standard deviation ( σ ) for Jackson  Corporation. * Jackson Expected Return k  =  P(k 1 )*k 1  + P(k 2 )*k 2  + ...+ P(k n )*k n k (firm)   = 0.25 (12%) + 0.5 (20%) + 0.25  (40%) = 3 + 10 + 10 =    k (firm)  = 23% =             (k i  - k) 2  * P i    Jefferson Corporation

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State of      Probability         Expected  Economy                     (P)  Return Recession         0.15                       6%   Normal             0.40    16%     Boom
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Unformatted text preview: 0.45 28% Find the expected return ( k ) and the standard deviation ( σ ) for Jefferson Corporation. * Jefferson Expected Return k = P(k 1 )*k 1 + P(k 2 )*k 2 + . ..+ P(k n )*k n k (firm) = 0.15 (6%) + 0.40 (16%) + 0.45 (28%) = 0.9 + 6.4 + 12.6 = k (firm) = 19.90% = (k i - k) 2 * P i Washington Corporation State of Probability Expected Economy (P) Return Recession 0.22 -11% Normal 0.48 21% Boom 0.30 35% Find the expected return ( k ) and the standard deviation ( σ ) for Washington Corporation....
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