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the stock of Business Adventures sells for $40 a share. likely dividend payout and end-of-year price...

the stock of Business Adventures sells for $40 a share. likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows:

Dividend Stock Price

Boom 2.00 50

Normal economy 1.00 43

Recession 0.50 34

a. Calculate the expected holding-period return and standard deviation of the holding- period return. All three scenarios are equally likely.

b. Calculate the expected return and standard deviation of a portfolio invested half in Business Adventures and half in Treasury bills. The return on bills is 4%

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