Calculate the ex-ante expected return

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Reference no: EM133067910

Use the following facts for this question and the three that follow.

You are given the following forecasts for the economy and the Agile Company at the beginning of the year:

State of the Economy

Probability of Occurrence

Expected Return

Expansion

20%

20%

Normal

60%

12%

Recession

20%

-10%

During the year, you observed the following:

Quarter

Opening Price

Dividend

Closing Price

January - March

$14.72

$0.50

$15.32

April - June

$15.32

$0.50

$16.50

July - September

$16.50

$0.50

$16.18

October - December

$16.18

$0.50

$16.76

Part A:

Calculate the ex-ante expected return to the nearest tenth of a percent

Part B:

Calculate the ex-ante standard deviation of returns to the nearest a hundredth of a percentage

Part C:

Calculate the ex-post average return to the nearest hundredth of a percentage

Part D:

Calculate the ex-post standard deviation of returns to 4 decimal points

Reference no: EM133067910

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