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Business, 07.09.2021 14:00 AutumnGarringer

You are deciding whether to buy a stock in Company X or Company Y. Both companies need $1,000 capital investment and will earn $200 in good years( with probability of 0.5) and $60 in bad years. The only difference between the companies is that Company X is planning to raise all of the $1000 needed by issuing equity, while Company Y plans to finance $500 through equity and $500 through bonds on which 10 percent interest must be paid. construct a table showing the expected value and standard deviation of the equity return for each of the companies. Based on this table, which company would you buy stock? Explain your choice

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