| Security Returns If State Occurs |
| State of |
Probability of |
| Economy |
State of Economy |
Roll |
Ross |
| Bust |
.20 |
-13 |
% |
17 |
% |
| Boom |
.80 |
24 |
|
6 |
|
Calculate the expected returns for Roll and Ross by filling in the following table (verify your answer by expressing returns as percentages as well as decimals): (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round your E(R) answers to 2 decimal places and your Product answers to 4 decimal places. Omit the "%" sign in your response.)
|
Roll |
|
Ross |
|
| |
|
|
|
| State of Economy |
Probability of
State of Economy |
Return If
State Occurs |
Product |
|
Return if
State Occurs |
Product |
|
| Bust |
.20 |
% |
|
% |
|
| Boom |
.80 |
% |
|
% |
|
| |
|
|
|
|
|
| |
|
E(R) = |
% |
E(R) = |
% |
| |
|
|
|
|
|