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Question 3: Ms. Deen is considering two securities A and B, and the relevant information is given below: State of the Economy Bear Bull Probability
Question 3: Ms. Deen is considering two securities A and B, and the relevant information is given below:
State of the Economy
Bear
Bull
Probability
Returns on Security A
Returns on Security B
Bear
0.6
3.5 %
8.0 %
Bull
0.4
15.0 %
10.0 %
Required:
a.Explain what is Bear and Bull Economy.
b.Calculate the expected rate of return, standard deviation, and coefficient of variations of the two securities separately.
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