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1.What is the expected return for the following stock? Probability .50 35 State Return Average Recession 25 05 -35 Depression 15 2.What is the risk

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1.What is the expected return for the following stock? Probability .50 35 State Return Average Recession 25 05 -35 Depression 15 2.What is the risk premium for the following returns if the risk-free rate is 4%? Probability 20 Return State Boom 75 Good 25 -10 -.50 55 Recession 15 Depression 10 3.What is the variance of the following returns? Probability 20 State Return Boom 75 Good 25 55 Recession .15 -10 Depression 10 -50 4. You are given the following data for four stocks Expected Return 10 Standard Deviation 5. Portfolio 20 A 08 .22 .20 40 C 18 35 Plot the risk versus return for each stock with standard deviation on the horizontal a. axis and expected return on the vertical axis. b. Which of the stocks would you not want, if you require greater returns for additional risk? Explain your

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