Shares of Rampage are currently priced at $50.00 per share. The following table indicates what could happen with theRampage stock price and dividend per share over the next year. What is the expected standard deviation of Rampage stock'sreturns?Outcome Probability of outcome Rampage stock price Rampage stock dividend00000GoodBad35%65%$81.44$28.7327.98% (plus or minus 4 bps)57.89% (plus or minus 4 bps)78.42% (plus or minus 4 bps)52.90% (plus or minus 4 bps)None of the above is within 4 bps of the correct answer$3.77$1.03

Step 1 : Compute for the individual returns of the two outcomes Return = (Stock Price in 1 year +…

Answered: Shares of Rampage are currently priced…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 2P

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