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Q.2. . You are considering investing in two stocks. Your concem is that the cronomy may not do well..But you are fairly confident that the
Q.2. . You are considering investing in two stocks. Your concem is that the cronomy may not do well..But you are fairly confident that the economy will grow at a normal rate with moderate inflation and interest rates given a range of economic outcomes over the next year. . Calculate the expected returns and standard deviation for cach stock. State of Economy Probability of State of Economy Recession 20 Normal :50 Boom 30 Rate of Return If State Occurs Stock A Stock B 15 20 20 -30 160 140 Using the information above, suppose you have $20.000 total. If you put $15.000 in Stock A and the remainder in Stock B, and the economy exists in a normal state for one year, what will be the expected return and standard deviation of your portfolio
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