Expected return in the distribution of hprs

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Reference no: EM133058027

You invest GHS30,000 in DML stock which is currently selling for GHS 13.75 per share. The share price depends on market conditions - demand and supply. The stock pays constant dividends of GHS 0.25 per share. You construct the following scenario analysis: State of the market Probability Year-end price Excellent 0.3 GHS 17.50 Good 0.4 GHS 15.5 Poor 0.22 GHS12.05 Crash 0.08 GHS7.05 Your alternative investment is GoG T-bill that provides insured rate or return of 9%

Required: Calculate

a) Expected return in the distribution of HPRs

b) The standard deviation of HPRs

c) Coefficient of variation

d) The risk premium

e) Standard deviation of excess returns

Reference no: EM133058027

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