Consider the following probability distribution of returns for Alpha Corporation: Current Stock Price ($) Stock Price in One Year ($) Return R Probability PR $35 40% 25% $25 $25 0% 50% $20 -20% 25%...


Consider the following probability distribution of returns for Alpha Corporation:































Current Stock Price ($)




Stock Price in One Year ($)




Return
R




Probability
PR





$35



40%



25%



$25



$25



0%



50%





$20



-20%



25%





  1. What is the expected return for Alpha Corporation?

  2. What is the variance of the return on Alpha Corporation?

  3. What is the standard deviation of the return on Alpha Corporation

  4. Suppose an investment is equally likely to have a 35% return or a -20% return. What is the expected return for this investment?

  5. Suppose an investment is equally likely to have a 35% return or a -20% return. What is the variance on the return for this investment

  6. Suppose an investment is equally likely to have a 35% return or a -20% return. What is the standard deviation on the return for this investment?



Jun 05, 2022
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