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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