Question

Consider the following information:

  

		Rate of Return if State Occurs
State of Economy	Probability of State of Economy	Stock A	Stock B
Recession	0.20	0.05	-0.17
Normal	0.50	0.07	0.15
Boom	0.30	0.14	0.33

  

Required:

(a)	Calculate the expected return for Stock A. (Do not round your intermediate calculations.)
	(Click to select)  9.05%  8.70%  8.62%  8.69%  9.14%

  

(b)	Calculate the expected return for Stock B. (Do not round your intermediate calculations.)
	(Click to select)  14.70%  10.33%  13.30%  14.00%  14.56%

  

(c)	Calculate the standard deviation for Stock A. (Do not round your intermediate calculations.)
	(Click to select)  3.73%  3.69%  3.37%  2.51%  3.55%

  

(d)	Calculate the standard deviation for Stock B. (Do not round your intermediate calculations.)
	(Click to select)  12.27%  18.22%  18.04%  17.35%  16.48%

Answer 1