1. Based on the following data; calculate the average return and the standard deviation

of returns for Stock X. (From Chapter 10)

YEAR Stock X Rate of Return

201a -5%

201b 15%

201c 20% 201d 30%

2. Based on the following data; calculate the expected return and the standard deviation of

returns for each stock. (From Chapter 11)

State of the Economy Probability Stock A Rate of Return Stock B Rate of Return

Recession 0.25 6% -20%

Normal Growth 0.45 7% 13%

Boom 0.3 11% 33%