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Problem 13-7 Calculating Returns and Standard Deviations [LO1] Consider the following information: Economy Economy Rate of Return If State Occurs State of Probability of -

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Problem 13-7 Calculating Returns and Standard Deviations [LO1] Consider the following information: Economy Economy Rate of Return If State Occurs State of Probability of - State of Stock A Stock B Recession 20 .05 - 20 Normal 57 08 .09 Boom 23 .13 26 a. Calculate the expected return for Stocks A and B. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the standard deviation for Stocks A and B. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) a. Stock A expected return Stock B expected return Stock A standard deviation Stock B standard deviation 8.55 % 7.11 % 2.69%

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