Question

    Rate of Return if State Occurs   State of Economy Probability of State of Economy Stock...

   

Rate of Return if State Occurs
  State of Economy Probability of State of Economy Stock A Stock B
  Recession 0.20 0.03 -0.19
  Normal 0.60 0.08 0.14
  Boom 0.20 0.15 0.35

   

Required:
(a)

Calculate the expected return for Stock A. (Do not round your intermediate calculations.)

8.40%

8.19%

10.07%

10.37%

7.49%

   

(b)

Calculate the expected return for Stock B. (Do not round your intermediate calculations.)

11.60%

10.00%

13.18%

11.02%

12.06%

   

(c)

Calculate the standard deviation for Stock A. (Do not round your intermediate calculations.)

3.83%

2.71%

4.02%

3.63%

3.98%

   

(d)

Calculate the standard deviation for Stock B. (Do not round your intermediate calculations.)

17.33%

12.25%

19.19%

16.46%

18.02%

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