Roenfeld Corp believes the following probability distribution exists for its stock. What is the coefficient of variation on the company's stock? Probability Stock's State of of State Expected the Economy Occurring Return Boom 0.45 25% Normal 0.5 15% Recession 0.05 5% 0.2839 0.3069 0.3299 0.3547 0.3813

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Business

Hazel Williams

27 March, 08:09

Roenfeld Corp believes the following probability distribution exists for its stock. What is the coefficient of variation on the company's stock? Probability Stock's State of of State Expected the Economy Occurring Return Boom 0.45 25% Normal 0.5 15% Recession 0.05 5% 0.2839 0.3069 0.3299 0.3547 0.3813

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Kaylynn Richard · Answer 1

Answer: 0.3069

Explanation:

Probability ofReturn Deviation Squared State Prob. This state This state from Mean Deviation * Sq. Dev. 0.45 25.00% 6.00% 0.36% 0.1620% 0.50 15.00% - 4.00% 0.16% 0.0800% 0.05 5.00% - 14.00% 1.96% 0.0980% Expected return = 19.00% 0.34% 0.3400% = Expected variance σ = 5.83% Coefficient of variation = σ/Expected return = 0.3069