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Consider the following information for the returns of two stocks: DoorDash Inc. (DASH) and The Coca-Cola Company (KO). You consider five possible scenarios for the

Consider the following information for the returns of two stocks: DoorDash Inc. (DASH) and The Coca-Cola Company (KO). You consider five possible scenarios for the stocks returns depending on how the economy performs over the coming year.

Rate of Return if State Occurs

State of Economy

Probability

Return on DASH stock

Return on KO stock

Boom

0.3

30%

8%

Above average

0.2

20%

8%

Average

0.2

10%

10%

Below average

0.2

0%

12%

Recession

0.1

-20%

15%

a) Calculate the expected returns for DASH.

b) Calculate the standard deviation for DASH.

c) Given the expected return of KO is 9.9%, would you expect the standard deviation of KO to be higher or lower than that of DASH? Briefly explain.

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