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You are interested in buying a stock that has a price of $42. You have projected that next year there is: a 10% probability the stock will equal $1, a 20% probability the stock will equal $31, a 30% probability the stock will equal $43, a 30% probability the stock will equal $55, and a 10% probability the stock will equal $80. Answer the following (showing all work): (a) what is the expected return on the stock if you buy today and sell next year? (b) what is the expected standard deviation of the stock?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92074507

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