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After extensive analysis, you predict the following returns for stocks A and B for three possible outcomes. Assume there are only three possible outcomes. Outcome
After extensive analysis, you predict the following returns for stocks A and B for three possible outcomes. Assume there are only three possible outcomes.
Outcome | Probability | Annual return | |
|
| Stock A | Stock B |
Boom | 20% | 20% | 30% |
Normal | 50% | 15% | 20% |
Recession | 30% | -10% | -15% |
Calculate the following statistics: (1/1000 of one percent without % sign, e.g. 12.671, if a negative percentage, -9.56):
1) Expected return for stock A: Answer
2) Expected return for stock B: Answer
3) Standard deviation for stock A: Answer
4) Standard deviation for stock B: Answer
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