Question

if
the economy booms, meyer&co. stock will have a return of 21.4
percent. if the economy goes into a recession, the stock will have
a loss of 13.7 percent. the probability of a boom is 63
percent

Answer #1

**Note: question doesn't specify, what needs to be
calculated. Therefore, Maximum Possible calculations are given. In
case, any further answer is needed, please comment.**

Economy | Probabilty | Return |
Probability* Return |
Return- Expected Return[D] |
Probability*D*D |

Boom | 0.63 | 0.214 | 0.13482 | 0.12987 | 0.010625717 |

Recession | 0.37 | -0.137 | -0.05069 | -0.22113 | 0.018092436 |

Expected Return= Sum of Probabilty*Return |
0.08413 =
8.413% |
Variance=Sum of [D^2] |
0.028718153 =
2.8718% |
||

Standard Deviation=Variance^1/2 |
0.169464312 =
16.9464% |
||||

Co
Efficient of Variation =Standard Deviation/Mean i.e. Expected Return |
0.1694643124/0.08413 |
2.014314896 |

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