Rate of Return If State State of Economy Probability of State of Economy Occurs Stock A Stock B Recession .20 .04 -21 Normal .50 .07 14 Boom .30 12 .32 Calculate the expected return for Stock A. Expected retur 7.90% 7.69% 8.30% 7.62% Calculate the expected return for Stock B. Expected return 12.40% 8.33% 13.02% 11.78% Calculate the standard deviation for Stock A. Standard deviation 2.91% 2.06% 3.06% 7 77%