Question
P13-7 Calculating Returns and Standard Deviations [LO1] Consider the following information: Rate of Return if State Occurs State of Economy Probability of State of Economy
P13-7 Calculating Returns and Standard Deviations [LO1]
Consider the following information: |
Rate of Return if State Occurs | |||
State of Economy | Probability of State of Economy | Stock A | Stock B |
Recession | 0.20 | 0.04 | -0.17 |
Normal | 0.50 | 0.07 | 0.13 |
Boom | 0.30 | 0.15 | 0.34 |
Required: |
(a) | Calculate the expected return for Stock A. (Do not round your intermediate calculations.) |
8.80% 8.62% 9.15% 9.24% 8.69% |
(b) | Calculate the expected return for Stock B. (Do not round your intermediate calculations.) |
13.83% 13.30% 10.00% 12.64% 13.96% |
(c) | Calculate the standard deviation for Stock A. (Do not round your intermediate calculations.) |
4.21% 4.42% 4.00% 2.98% 4.38% |
(d) | Calculate the standard deviation for Stock B. (Do not round your intermediate calculations.) |
17.67% 16.79% 12.49% 18.38% 18.55% |
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