Chapter 7
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0
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12
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8
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4
2
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one year ago today
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18
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14
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one year ago today
Titman/Keown/Martin Financial Management 11e 7
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18
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14
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one year ago today
Titman/Keown/Martin Financial Management 11e 9
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Time Asman Salinas
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12
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8
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Time 1 Time 2 Time 3 Time 4
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32
28
24
20
16
12
8
4
0
Time 1 Time 2 Time 3 Time 4
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Probability
Return
60
50
40
30
20
10
0
-3% 2% 4% 6%
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Common Stock A Common Stock B
Probability Return Probability Return
70
60
50
40
30
20
10
0
11% 15% 19%
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( ) ( ) ( )
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Time
Caswell
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Time
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( )
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Time Carson
Barris
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Time Value of Value of
Barris Stock Annual Rate Carson Stock Annual Rate
of Return of Return
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Barris Company Carson Company
20 40
18 36
16 32
14 28
12 24
10 20
8 16
6 12
4 8
2 4
0 0
Time 1 Time 2 Time 3 Time 4 Time 1 Time 2 Time 3 Time 4
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( ) ( )
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Titman/Keown/Martin Financial Management 11e 37
