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#4. Consider the return behavior of the following two stocks: State of Economy Probability of State Return on Stock A Return on Stock B Recession

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#4. Consider the return behavior of the following two stocks: State of Economy Probability of State Return on Stock A Return on Stock B Recession .25 -4.0% 7% Normal 60 7.2% 8.2% Boom 15 13.4% 9.4% (a) Calculate the expected return on each stock. (b) Calculate the standard deviation of the return on each stock. (c) Calculate the covariance and correlation of returns between the two stocks

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