Question

There is a 28.50% probability of a below average economy and a 71.50% probability of an average economy. If there is a below average economy stocks A and B will have returns of 4.90% and 19.90%, respectively. If there is an average economy stocks A and B will have returns of 6.50% and 2.80%, respectively. Compute the:

a) Expected Return for Stock A:

b) Expected Return for Stock B :

c) Standard Deviation for Stock A:

d) Standard Deviation for Stock B :

Answer 1