Question 44\ 4 points\ You are considering iwo stocks A and B for your portfolio. Your cconomic analysis suggests that there is a

25%

chance of an "economic boom",

50%

chance of "normalcy" and a

25%

chance of a "recession". Given the three "States of the Economy" and the above "probabilities", you expect that Stock A will provide a retum of

20%

during "economic boom", a retum of

10%

during "normaloy" and a retum of

0%

during "recession". Stock B on the other baind is expected to provide a return of

5%

during "esonomic boom", a return of

10%

during "nomaley" and a return of

15%

daring "recession". The expected rate of retum for Stock B is:\

1.10%

\

2.9%

\ 3.

7%

\

4.6%

\

5.5%

\ Question 44 of 50

You are considering two stocks A and B for your portfolio. Your economic analysis suggests that there is a 25% chance of an "economic boom", 50% chance of "normaley" and a 25% chance of a "recession". Given the three "States of the Economy" and the above "probabilities", you expect that Stock A will provide a retum of 20% during "ccosomic boom", a return of 10% during "normalgy" and a retum of 0% during "recession". Stock B on tho other hand is expected to provide a return of 5% during "economic boom", a retum of 10% during "nomalcy" and a return of 15%.. ining "recession". The expected rate of retum for Stock B is: 1.10% 2.9% 3. 7% 4. 6% 5.5%