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Problem 11-8 Calculating Returns and Standard Deviations (LO1, CFA2) Consider the following information: Rate of Return if State Occurs State of Economy Probability of State
Problem 11-8 Calculating Returns and Standard Deviations (LO1, CFA2)
Consider the following information:
| Rate of Return if State Occurs | |||||||||||
| State of Economy | Probability of State of Economy | Stock A | Stock B | ||||||||
| Recession | .25 | .04 | .17 | ||||||||
| Normal | .30 | .10 | .17 | ||||||||
| Boom | .45 | .15 | .37 | ||||||||
a. Calculate the expected return for the two stocks. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
b. Calculate the standard deviation for the two stocks. (Do not round your intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
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