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Consider the following information: Probability of State Rate of Return if State Occurs Economy of Economy Stock A Stock B Recession .24 .055 .44 Normal
Consider the following information:
Probability of State | Rate of Return if State Occurs | ||||||||||
Economy | of Economy | Stock A | Stock B | ||||||||
Recession | .24 | .055 | .44 | ||||||||
Normal | .64 | .135 | .34 | ||||||||
Boom | .12 | .330 | .57 | ||||||||
a. Calculate the expected return for the two stocks. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Expected return | ||
E(RA) | % | |
E(RB) | % | |
b. Calculate the standard deviation for the two stocks. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Standard deviation | ||
A | % | |
B | % | |
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