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State of economy Probability of state of economy Rate of return if state occurs Stock A Stock B Recession 0.20 0.06 -0.19 Normal 0.50 0.08
| State of economy | Probability of state of economy | Rate of return if state occurs | |
| Stock A | Stock B | ||
| Recession | 0.20 | 0.06 | -0.19 |
| Normal | 0.50 | 0.08 | 0.16 |
| Boom | 0.30 | 0.16 | 0.34 |
A) What is the expected return on Stock A?
B What is the standard deviation of return on Stock B?
C Which is riskier?
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Fundamentals Of Financial Management
Authors: James C Van Horne
3rd Edition
0133393410, 978-0133393415
