4.

Annual returns of three stocks are given below. Two of them (Air America and Air Brazil) are airline stocks and one (Star Oil) is an oil stock. In general, when oil prices go up, airline company stocks go down and oil company stocks go up.

YEAR	Air America	Air Brazil	Star Oil
2016	-28%	9%	-2%
2017	30%	-28%	-5%
2018	7%	7%	9%
2019	-5%	-2%	-28%
2020	-2%	-5%	30%
2021	9%	30%	7%

How much is the risk (i.e., sample annual standard deviation)? Notice that all three stocks have the same risk. Enter your answer in the following format: 0.1234 Hint: Answer is between 0.1718 and 0.2100

_________?

8.

Researchers forecast the possible five economy states and their probabilities for the year 2023 as shown below. Also provided are the Stock return estimates in each of those five economic states.

Economy State	Probability	Stock Returns
Big Recession	0.20	-27.0%
Mild Recession	0.15	-7.0%
Normal	0.40	15.0%
Mild Boom	0.15	30.0%
Mega Boom	0.10	45.0%

How much is the expected stock return in the year 2023? Enter your answer in the following format: + or - 0.1234 Hint: Answer is between 0.0778 and 0.0941

____________?