All three possible states of the economy are equally likely


Escapists Firms Corp. sells home videos. In a boom economy its rate of return is negative 28%, in a normal economy its rate of return is 8% and in a recession its rate of return is 48%. All three possible states of the economy are equally likely. Calculate the expected rate of return and standard deviation of Escapist.

9.33, 31.04
31.04, 9.33
30, 10
31.04

 

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Finance Basics: All three possible states of the economy are equally likely
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