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| Teaching Since: | May 2017 |
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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
The common stock of Escapist Films sells for $25 a share and offers the following payoffs next year:
D i vidend Stock Price
|
Boom |
0 |
$18 |
|
Normal economy |
$1.00 |
26 |
|
Recession |
3.00 |
34 |
Calculate the expected return and standard deviation of Escapist. All three scenarios are equally likely. Then calculate the expected return and standard deviation of a portfolio half
invested in Escapist and half in Leaning Tower of Pita (from problem 14). Show that the portfolio standard deviation is lower than either stock’s. Explain why this happens
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