Question

The common stock of Mandarin, Inc., a restaurant chain, will generate the following payoffs to investors...

The common stock of Mandarin, Inc., a restaurant chain, will generate the following payoffs to investors next year:
Probability Dividend Stock Price
Boom 0.35 $7 $200
Normal economy 0.45 $5 $127
Recession 0.2 $1 $7
The company goes out of business if a recession hits. Calculate the expected rate of return and standard deviation of return to Mandarin share-holders. The stock is selling today for $95. (Round your answers to 2 decimal places.)
Expected rate of return? %
Standard deviation? %
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