# The common stock of Manchester & Moore is expected to earn 14 percent in a recession,...

###### Question:

The common stock of Manchester & Moore is expected to earn 14 percent in a recession, 7

percent in a normal economy, and lose 4 percent in a booming economy. The probability of a

boom is 15 percent while the probability of a recession is 5 percent. What is the expected rate of

return on this stock?

a. What is the expected rate of return on this stock?

5.7%

b. What is the variance of the returns on this stock?

0.001891

c. What is the standard deviation of the returns on this stock?

4.35%

Please check my answers and show work typed no excel or grid style please as I am on mobile.

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