Finance Assignment | Professional Writing
June 2nd, 2020
The stock of Business Adventures sells for $70 a share. Its 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 | $2.50 | $78 |
| Normal economy | 1.30 | 75 |
| Recession | 0.90 | 60 |
a. Calculate the expected holding-period return and standard deviation of the holding-period return. All three scenarios are equally likely. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
b. Calculate the expected return and standard deviation of a portfolio invested half in Business Adventures and half in Treasury bills. The return on bills is 5%. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
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