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

  1. Calculate the expected holding-period return and standard deviation of the holding period return.  All three scenarios are equally likely.
  • The stock of Business Adventurers sells for $30 a share.  It 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

$3.20

$52

Normal Growth

2.50

40

Recession

0.00

27

  1. a. Calculate the expected holding-period return       and standard deviation of the holding period return.  All three scenarios are equally likely.Answer: E(HPR)=0.385567, Var(HPR) = 0.1478, SD(r)=38.4%
  2. b. Calculate the expected return and standard deviation a portfolio invested half in Business Adventures and half in Treasury bills.  The return on bills is 4%.
  3. Answer: E(r) = 21.3%, SD = 19.2%

  1. c. What is the complete portfolio’s 99% confidence interval based on your calculation from b?

Can you help me to do this question? You can also do and check my answers from question a and b as well if you have time. Thank you!

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