If the economy recovers next year, analysts expect Stock Ys return for the year to be 15%;

Question:

If the economy recovers next year, analysts expect Stock Y’s return for the year to be 15%; if the economy does not recover, analysts expect Stock Y’s return for the year to be −15%. If there is a 50% chance that the economy will recover, and a 50% that it will not, what is:

a. The expected return on Stock Y for next year?

b. The standard deviation of the return on Stock Y for next year?

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