Question

Consider the following information:

Rate of Return if State Occurs |
|||||||||||

State of Economy | Probability of State of Economy | Stock A | Stock B | ||||||||

Recession | 0.25 | 0.05 | –0.11 | ||||||||

Normal | 0.55 | 0.12 | 0.16 | ||||||||

Boom | 0.20 | 0.16 | 0.36 | ||||||||

**a.** Calculate the expected return for the two
stocks. **(Do not round intermediate calculations. Enter your
answers as a percent rounded to 2 decimal places.)**

**b.** Calculate the standard deviation for the two
stocks. **(Do not round your intermediate calculations. Enter
your answers as a percent rounded to 2 decimal
places.)**

Answer #1

Consider the following information:
Rate of Return if State Occurs
State of Economy
Probability of State of Economy
Stock A
Stock B
Stock C
Boom
0.25
0.18
0.32
0.25
Good
0.20
0.12
0.22
0.09
Poor
0.40
–0.03
–0.11
–0.02
Bust
0.15
–0.11
–0.16
–0.10
a. Your portfolio is invested 30 percent each
in A and C and 40 percent in B. What is the expected return of the
portfolio? (Do not round intermediate calculations. Enter
your answer as a percent...

Consider the following information:
Rate of Return if State Occurs
State of Economy
Probability of State of Economy
Stock A
Stock B
Stock C
Boom
0.25
0.23
0.39
0.26
Good
0.15
0.12
0.15
0.16
Poor
0.30
–0.02
–0.12
–0.03
Bust
0.30
–0.18
–0.18
–0.11
a. Your portfolio is invested 35 percent each
in A and C and 30 percent in B. What is the expected return of the
portfolio? (Do not round intermediate calculations. Enter
your answer as a percent...

Consider the following information: Rate of Return if State
Occurs State of Economy Probability of State of Economy Stock A
Stock B Stock C Boom 0.30 0.23 0.31 0.30 Good 0.15 0.16 0.11 0.12
Poor 0.30 0.02 –0.08 –0.07 Bust 0.25 –0.22 –0.24 –0.13 a. Your
portfolio is invested 25 percent each in A and C and 50 percent in
B. What is the expected return of the portfolio? (Do not round
intermediate calculations. Enter your answer as a percent...

State of Economy
Probability of State of Economy
Stock A
Stock B
Recession
0.20
0.06
–0.11
Normal
0.55
0.13
0.17
Boom
0.25
0.18
0.37
a. Calculate the expected return for the two
stocks. (Do not round intermediate calculations. Enter your
answers as a percent rounded to 2 decimal places.)
Return for A:
Return for B:
b. Calculate the standard deviation for the two
stocks. (Do not round your intermediate calculations. Enter
your answers as a percent rounded to 2 decimal...

Consider the following information:
Rate of Return if State Occurs
State of Economy
Probability of State of Economy
Stock A
Stock B
Stock C
Boom
0.25
0.18
0.37
0.27
Good
0.15
0.13
0.14
0.15
Poor
0.40
–0.01
–0.11
–0.04
Bust
0.20
–0.19
–0.16
–0.13
a. Your portfolio is invested 40 percent each
in A and C and 20 percent in B. What is the expected return of the
portfolio? (Do not round intermediate calculations. Enter
your answer as a percent...

Consider the following information:
Rate of Return if State Occurs
State of
Probability of
Economy
State of Economy
Stock A
Stock B
Recession
.10
.04
−
.17
Normal
.60
.09
.12
Boom
.30
.17
.27
a.
Calculate the expected return for Stocks A and B. (Do
not round intermediate calculations and enter your answers as a
percent rounded to 2 decimal places, e.g., 32.16.)
b.
Calculate the standard deviation for Stocks A and B.
(Do not round intermediate...

Consider the following information:
Rate of Return if State Occurs
State of
Probability of
Economy
State of Economy
Stock A
Stock B
Recession
.10
.04
−
.17
Normal
.60
.09
.12
Boom
.30
.17
.27
a.
Calculate the expected return for Stocks A and B. (Do
not round intermediate calculations and enter your answers as a
percent rounded to 2 decimal places, e.g., 32.16.)
b.
Calculate the standard deviation for Stocks A and B.
(Do not round intermediate...

Consider the following information:
Rate of Return If State Occurs
State of Economy
Probability of State of Economy
Stock A
Stock B
Recession
.18
.07
−.18
Normal
.55
.10
.11
Boom
.27
.15
.28
Calculate the expected return for the two stocks. (Do not
round intermediate calculations. Enter your answers as a percent
rounded to 2 decimal places, e.g., 32.16.)
Expected return
Stock A
%
Stock B
%
Calculate the standard deviation for the two stocks. (Do
not round intermediate...

Consider the following information:
Rate of Return If State Occurs
State of
Probability of
Economy
State of Economy
Stock A
Stock B
Recession
.20
.08
−
.15
Normal
.50
.11
.14
Boom
.30
.16
.31
a.
Calculate the expected return for Stocks A and B. (Do
not round intermediate calculations and enter your answers as a
percent rounded to 2 decimal places, e.g., 32.16.)
b.
Calculate the standard deviation for Stocks A and B. (Do
not round intermediate...

Consider the following information:
Rate of Return If State Occurs
State of
Probability
of
Economy
State of
Economy
Stock A
Stock B
Recession
.25
.04
–.17
Normal
.30
.10
.17
Boom
.45
.15
.37
a.
Calculate the expected return for the two stocks. (Do
not round intermediate calculations. Enter your answers as a
percent rounded to 2 decimal places. Omit the "%" sign in your
response.)
Expected return for
A
%
Expected return for
B
%
b.
Calculate...

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