) You purchased stock in Cough For Dollars (CFD), a disposable mask producer. Youwill hold this investment for one year. At the end of this period, there are three possibleoutcomes:i. Recession, the probability of which is 20%. CFD stock return will be-30% in this scenario.i. Stagnation, the probability of which is 50%. CFD stock return will be 5%in this scenario.ii. Expansion, the probability of which is 30%. CFD stock return will be 20%in this scenario.a. Compute your expected return from holding stock in CFD.b. Compute the standard deviation of this return.E3 FocusMacBook Pro

Expected return = 0.2*-30% + 0.5*5% + 0.3*20% = 2.50%

Answered: You purchased stock in Cough For…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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