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What is the expected return on the stock

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Reference no: EM132398412

You are interested in buying a stock that has a price of $32. You have projected that next year there is: a 10% probability the stock will equal $1, a 20% probability the stock will equal $24, a 30% probability the stock will equal $33, a 30% probability the stock will equal $45, and a 10% probability the stock will equal $60. Answer the following (showing all work):

(a) What is the expected return on the stock if you buy today and sell next year?

(b) What is the expected standard deviation of the stock?

Reference no: EM132398412

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