hypothetical end
hypothetical end, QUESTION FIVE Give the following hypothetical end- of – period prices for shares of the Drill –on- Corporation, and assuming a current price of sh. 50 per share Probability 0.15 0.1 0.3 0.2 0.25 End of Period Price per Share 35 42 50 55 60 i) Calculate the rate of return for each probability; what is the expected return? The variance of end- of- period return; The range and semi-interquartile range ii) Suppose forecasting is refined such that probabilities of end- of- period prices can be broken down further, resulting in the following Probability 0.01 0.05 0.07 0.02 0.1 0.3 0.2 0.15 0.05 0.05 End of period price per share 0 35 38.57 40 42 50 55 57 60 69 a) Calculate and explain the change in the expected returns, the range of returns and the semi- interquartile range of returns. b) Calculate the semi variance of the end – of period returns. Why might some investors be concerned with semi variance as a measure of risk
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