A stock is expected to return 20% in a booming economy. 7.50% in a normal economy and -25% in a recession. THe probability of a booming economy is 20% while the probability of a normal economy is 60% and the probability of a recession is 20% What is the expected high and low range of returns when computing 1 standard deviation?

Answers:

1.) 3.50%, 15.05%

2.) 0%, 3.50%

3.) 1.24%, 5.77%

4.) -29.67%, 36.67%

5.) -11.55%, 18.55%