Question
1. There is a 40.70% probability of a below-average economy and a 59.30% probability of an average economy. If there is a below-average economy, Stocks
1. There is a 40.70% probability of a below-average economy and a 59.30% probability of an average economy. If there is a below-average economy, Stocks A and B will have returns of -5.56% and -5.22% , respectively. If there is an average economy, Stocks A and B will have returns of 5.19% and 4.71%, respectively. Compute the following for Stocks A and B: (Please write answers as percentages (e.g. .1234 should be written as 12.34):
- Stock A Expected Return: %
- Stock B Expected Return: %
- Stock A Standard Deviation: %
- Stock B Standard Deviation: %
2. A stock has monthly returns of 1.1%, -1.92% , 0.25% , and -0.83%. What is the stock's geometric average return? Please write answer as a percentage (e.g. .1234 should be written as 12.34).
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