11.7

Consider the following information:

		Rate of Return If State Occurs
State of	Probability of
Economy	State of Economy	Stock A	Stock B
Recession	.25	.05	.11
Normal	.55	.12	.16
Boom	.20	.16	.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. Omit the "%" sign in your response.)

Expected return forA	%
Expected return forB	%

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. Omit the "%" sign in your response.)

Standard deviation forA	%
Standard deviation for B	%