ch05_expectedReturnVariance (1)

ch05_expectedReturnVariance (1) - Annual Dividend Boom 1...

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FINAN520 chapter 5 Expected Return and Variance In-class exercise A share of stock of A-star Inc. is now selling for $25. A financial analyst summarizes the uncertainty about the rate of return on the stock by specifying three possible scenarios: State Scenario, s Probability, p End-of-year Price
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Unformatted text preview: Annual Dividend Boom 1 0.3 $35 $4.00 Normal 2 0.4 27 4.00 recession 3 0.3 12 4.00 a. What are the holding-period returns (HPR) of A-star stock for each of the three scenarios? b. Calculate the expected HPR c. Calculate the standard deviation of the HPR....
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