The returns on the common stock of Alpha Cycles, Inc. are quite cyclical. In a boom economy, the stock is expected to return 28.0% in comparison to 12.0% in a normal economy and negative 14.0% in a recessionary period. The probability of a recession is 17% while the probability of a boom is 22%. The remainder of the time the economy will be at normal levels. What is the standard deviation of the returns on this stock? Multiple Choice 16.97% 13.05% 6.01% 19.97% 13.58%

The returns on the common stock of Alpha Cycles, Inc. are quite cyclical. In a boom economy, the stock is expected to return 28.0% in comparison to 12.0% in a normal economy and negative 14.0% in a recessionary period. The probability of a recession is 17% while the probability of a boom is 22%. The remainder of the time the economy will be at normal levels. What is the standard deviation of the returns on this stock? Multiple Choice 16.97% 13.05% 6.01% 19.97% 13.58%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 14P

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