QUESTION TWO Stock A Stock B Ro ? 15% Expected Return (ER) Standard Deviation(o) ? 20% The price of stock A today is K50. The price of stock A next year will be K40 if the economy is in a recession with a dividend of K1.00; K55 if the economy is normal with a dividend of K1.5 and K60 if the economy is expanding with a dividend of K2.00. The likelihood of a recession, normal and expansion are 0.2, 0.6, and 0.2 respectively. The T-Bill return is 5% Voce Required: A. Find the ER and o of stock A. (8 Marks) B. Given the choice between the two stocks which would you prefer? (2 Marks)