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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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