The Returns on the Common Stock of New Image Products

question 78

Multiple Choice

The returns on the common stock of New Image Products are quite cyclical.In a boom economy,the stock is expected to return 32 percent in comparison to 14 percent in a normal economy and a negative 28 percent in a recessionary period.The probability of a recession is 25 percent while the probability of a boom is 20 percent.What is the standard deviation of the returns on this stock?

• A)21.41 percent
• B)21.56 percent
• C)25.83 percent
• D)32.08 percent
• E)39.77 percent

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