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Calculate the expected return for holding the share for year

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Reference no: EM132912565

An investor buys 1 share of Zephyr Ltd at the price of $34.5 on July 1, 2021. The firm is not expected to pay any dividends. Consider the following three possible scenarios for the share price on July 1, 2022:

  1. $58 if the economy is "good", with a probability of 30%.
  2. $36 if the economy is "moderate", with a probability of 55%.
  3. $22.5 if the economy is "bad", with a probability of 15%.

Problem a) Calculate the expected return for holding the share for a year.

Problem b) Calculate the variance of return and standard deviation of return.

Reference no: EM132912565

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