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A stock’s return has the following distribution:   Demand for the company’s products   Probability of this demand occurring   Rate of Return if this demand occurs Weak 0.1 (0.5) Below Average 0.2 (0.05) Average 0.4 0.16 Above Average 0.2 0.25 Strong 0.1 0.60   Use statistical measures to calculate the risk and return of the stock.

A stock’s return has the following distribution:   Demand for the company’s products   Probability of this demand occurring   Rate of Return if this demand occurs Weak 0.1 (0.5) Below Average 0.2 (0.05) Average 0.4 0.16 Above Average 0.2 0.25 Strong 0.1 0.60   Use statistical measures to calculate the risk and return of the stock.

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter2: Risk And Return: Part I
Section: Chapter Questions
Problem 5P
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Question

A stock’s return has the following distribution:

 

Demand for the

company’s products

 

Probability of this

demand occurring

 

Rate of Return if

this demand

occurs

Weak

0.1

(0.5)

Below Average

0.2

(0.05)

Average

0.4

0.16

Above Average

0.2

0.25

Strong

0.1

0.60

 

Use statistical measures to calculate the risk and return of the stock.

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