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

Jairo Chen

28 December, 23:33

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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Cecilia Wilcox · 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