Question

Based on the following information, calculate the expected return and standard deviation and variance for two...

Based on the following information, calculate the expected return and standard deviation and variance for two stocks:

This is what i have so far and i am stuck if someone can check my work so far and help me fill in the rest thanks

State of the Economy   Probability   Rate of Return Stock A   Rate of Return Stock B  
Recession .25 .05 -.19
Normal .50 .06 .14
Boom .25 .10 .34
Stock A Probability Return Product Return
Deviation
Squared
Deviation
Product
Recession 0.25 0.05 1.2500
Normal 0.50 0.06 3.0000
Boom 0.25 0.10 2.5000
E(R) =   6.5000 Variance =                 -     
Standard Deviation 1.92%
Stock B Probability Return Product Return
Deviation
Squared
Deviation
Product
Recession 0.25 (0.19) (47.6188)
Normal 0.50 0.14 7.0000
Boom 0.25 0.34 85.0000
E(R) =   10.7500 Variance =                 -     

Homework Answers

Answer #1
Stock A Probability Return Product Return Squared Product
Deviation Deviation
Recession 0.25 0.05 1.25 -1.75 3.0625 0.765625
Normal 0.5 0.06 3 -0.75 0.5625 0.28125
Boom 0.25 0.1 2.5 3.25 10.5625 2.640625
E(R) =   6.5 Variance = 3.6875
Standard Deviation 1.92%
Stock B Probability Return Product Return Squared Product
Deviation Deviation
Recession 0.25 -0.19 -47.6188 -29.75 885.0625 221.265625
Normal 0.5 0.14 7 3.25 10.5625 5.28125
Boom 0.25 0.34 85 23.25 540.5625 135.140625
E(R) =   10.75 Variance = 361.6875

Note :

Return Deviation = Probable Return- Expected Return

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