What is the expected returned of the stock

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Reference no: EM132072389

The returns on the common stock of New Image Products are quite cyclical. In a boom economy, the stock is expected to return 32 percent in comparison to 14 percent in a normal economy and a negative 28 percent in a recessionary period.

The probability of a recession is 25 percent while the probability of a boom is 10 percent and normal period is 65%.

a. What is the expected returned of the stock?

b. What is the variance of the stock?

c. What is the standard deviation of the returns on this stock?

Reference no: EM132072389

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