- 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 |
- 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%
- 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%.
- Answer: E(r) = 21.3%, SD = 19.2%
- 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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