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LO 4: Able to analyze and make long-term investment decisions; 20%) The following is the probability distribution data for stocks A and B: State

 

LO 4: Able to analyze and make long-term investment decisions; 20%) The following is the probability distribution data for stocks A and B: State Probability Return on Stock A Return on Stock B 1 0.10 10 % 8% 20.20 13 % 7% 3 0.20 12% 6% 4 0.30 14% 9% 5 0.20 15 % 8% Question: Calculate expected rates of return of stocks and standard deviations of stocks A and B. If you invest 40% of your money in share A and the remainder in share B, what is the expected rate of return and standard deviation of the portfolio?

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