Question

   

		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%

Answer 1