1. Business
  2. Finance
  3. 1 the stock of blue water tours inc is expected...

Question: 1 the stock of blue water tours inc is expected...

Question details

1.

The stock of Blue Water Tours, Inc. is expected to return 21.50 percent in a boom economy, 16.50 percent in a normal economy, and lose 15.50 percent in a recessionary economy. What is the expected rate of return on this stock if there is a 7.00 percent chance the economy booms, and an 83.00 percent chance the economy will be normal?

14.13 percent

13.65 percent

13.40 percent

12.48 percent

2.

A stock is expected to earn 15 percent in a boom economy and 7 percent in a normal economy. There is a 35 percent chance the economy will boom and a 65.0 percent chance the economy will be normal. What is the standard deviation of these returns?

3.82 Percent

4.85 Percent

4.97 Percent

5.63 Percent

3.

A portfolio consists of 24 percent Stock A, 54 percent Stock B, and 22 percent Stock C. What is the portfolio expected return given the following:

State of Economy

Probability of State of Economy

Stock A Returns

Stock B Returns

Stock C Returns

Normal

.75

16%

   9%

   26%

Recession

.25

–2    

19

–24

10.55 percent

11.94 percent

8.24 percent

12.47 percent

Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution