Question

Based on the following information, please answer the question:

State of Economy	Probability	Stock ABC’s return	Stock XYZ’s return
Boom	20%	35%	0%
Recession	80%	10%	10%

What are the expected returns and standard deviations of the two stocks above?

Group of answer choices

E(RABC)=15% ; ABC=10% ; E(RXYZ)=8% ; XYZ=4%.

E(RABC)=15% ; ABC=10% ; E(RXYZ)=8% ; XYZ=2%.

E(RABC)=15% ; ABC=6% ; E(RXYZ)=8% ; XYZ=4%.

E(RABC)=15% ; ABC=6% ; E(RXYZ)=8% ; XYZ=2%.

Answer 1