Intro We know the following expected returns for stocks A and B, given different states of the economy: Part 1 Attempt 1/5 for 10 pts. What is the expected return for stock A? Correct The expected retum is the weighted average return across all states of the economy: E(rA)=s(psE(rA,s))=0.3(0.05)+0.50.1+0.20.18=0.071 Part 2 Attempt 1/5 for 10 pts. What is the expected return for stock B? Correct E(rB)=A(psE(rB,s))=0.30.03+0.50.06+0.20.1=0.059 Part 3 Attempt 4/5 for 10 pts. What is the standard deviation of returns for stock A ? Correct Variance: 2=n(p3(E(rA,A)E(rA))2)=0.3(0.050.071)2+0.5(0.10.071)2+0.2(0.180.071)2 The expected return is the weighted average return actoss in states of the economy: E(rA)=(psE(rA,s))=0.3(0.05)+0.50.1+0.20.18=0.071 Part 2 17 - Attempt 1/5 for 10 pts. What is the expected return for stock B? Correct r E(rB)=s(psB(rB,s))=0.30.03+0.50.06+0.20.1=0.059 Part 3 (1.) Attempt 4/5 for 10 pts. What is the standard deviation of returns for stock A? Correct Variance: 2=(p,(E(rA,s)E(rA))2)=0.3(0.050.071)2+0.5(0.10.071)2+0.2(0.180.071)2=0.00719 Standard deviation: =2=0.007190.5=0.0648 Part 4 E * Antempt 3/5 for 10 pts. What is the standard deviation of neturns for stock B