The following probability distribution/expected returns exists for Walgreens and

Question

The following probability distribution/expected returns exists for Walgreens and CVS, respectively:

Economy        Probability       ROR (Walgreens)

Strong                .65                    19%

Normal               .15                   12%

Weak                   .2                       5%

CVS:

Strong                  .67                     18%

Normal                 .12                     14%

Weak                    .21                       8%

What is the expected rate of return for each?

Which has the least risk, as measured by ?

What is for each company?

Explanation / Answer

CVS is least risky

Economy Probability ROR(Walgreens) Strong 0.65 19% 0.1235 Normal 0.15 12% 0.018 Weak 0.2 5% 0.01 Expected Return 15.15%

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.