New West Chocolate Mountain stock is expected to earn 12 % in a boom , 8 % in a normal economy , and lose in a recession economy . The probability of a boom is 15 % while the probability of a normal economy is 60 % and the chance of a recession is 25 % . The Canadian treasure - bill rate is 0.5 % and the market risk premium is 5 % . A ) What is the expected rate of return on this stock ? B ) What is the standard deviation for this stock ? C ) If the beta for this stock is 1.3 , what is New West Chocolate Mountain's reward to risk ratio ? D ) Based on the reward - to - risk ratio , if you were an investor , would you buy this stock ? Explain . Use four decimal places . Present the intermediate calculations .

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