Question

Consider the following information:

  

		Rate of Return if State Occurs
State of Economy	Probability of State of Economy	Stock A	Stock B
Recession	0.10	0.06	-0.19
Normal	0.70	0.09	0.15
Boom	0.20	0.15	0.32

  

Required:

(a)	Calculate the expected return for Stock A. (Do not round your intermediate calculations.)
	A. 9.90% B. 9.52% C. 11.65% D. 11.70% E. 9.05%

  

(b)	Calculate the expected return for Stock B. (Do not round your intermediate calculations.)
	A. 15.00% B. 9.33% C. 16.75% D. 14.25% E. 15.60%

  

(c)	Calculate the standard deviation for Stock A. (Do not round your intermediate calculations.)
	A. 2.70% B. 1.91% C. 2.83% D. 2.57% E. 2.81%

  

(d)	Calculate the standard deviation for Stock B. (Do not round your intermediate calculations.)
	A. 13.17% B. 9.31% C. 14.83% D. 12.51% E. 13.69%

Answer 1