What is the expected return-what is the variance of returns

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1. You project that a stock will return 15% in a good economy, and lose 2% in a bad one. If there is a 50/50 chance of a good or bad economy,

What is the expected return

What is the variance of returns

What is the standard deviation of returns?

2. A stock has returned 8, 10, and 25% over the last three years. 

What is the expected return?

What is the variance of returns?

What is the standard deviation of returns?

3. You estimate the beta of a stock to be 2.0. The market is expect to return 10% next year, and the risk free rate is 2%. What is the expected return of the stock?

4. Under the CAPM, why does stock-specific (idiosyncratic, diversifiable) risk not matter?

Reference no: EM131549986

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