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(7) Calculating Returns and Standard Deviations - [LO1] : Based on the following information, calculate the expected return and standard deviation for the two stocks.

(7) Calculating Returns and Standard Deviations - [LO1] :

Based on the following information, calculate the expected return and standard deviation for the two stocks.

STATE OF ECONOMY PROBABILITY OF STATE OF ECONOMY Rate of Return If State Occurs - Stock A Rate of Return if State Occurs - Stock B
Recession .15 .04 -.17
Normal .55 .09 .12
Boom .30 .17 .27

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