The AXp stock sells for $40 per share. Its likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows:
State of Economy Dividend Stock Price
Boom 2 50
Normal Economy 1 43
Recession 0.5 34
(a) Calculate the expected holding-period return and standard deviation of the holding-period return. All three scenarios are equally likely.