Dividend Stock Price
Boom $5.00 $195
Normal economy $2.00 $100
Recession $0.00 $0
The company goes out of business if a recession hits. Calculate the expected rate of return and standard deviation to Leaning Tower of Pita shareholders. Assume for simplicity that the three possible states of the economy are equally likely. The stock is selling today for $90.
Enter formulas to calculate the expected rate of return on the stock. Use the MS Excel STDEVP function to calculate the standard deviation.
Stock price today $90.00
Normal economy FORMULA
Expected rate of return FORMULA
Standard Deviation FORMULA
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