Problem 10-24 Expected Return and Risk (LG10-1)

Following are four economic states, their likelihoods, and the potential returns:

Economic State Probability Return

Fast growth 0.21 53 %

Slow growth 0.60 13

Recession 0.12 22

Depression 0.07 55

Compute the expected return and standard deviation. (Do not round intermediate calculations and

round your answers to 2 decimal places.)

Expected return ? %

Standard deviation ? %