Explain the return on the common stock
The return on the common stock on 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 as well as a negative 28 percent in a recessionary period. The possibility of a recession is 25 percent while the probability of a boom is 10 percent. Explain what is the standard deviation of the returns on this stock?