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The following information about two stocks, A and B, are given dependent on various states of the economy: State of the Economy Probability of Occurrence
The following information about two stocks, A and B, are given dependent on various states of the economy: State of the Economy | Probability of Occurrence | Expected Return for Stock A | Expected Return for Stock B |
High Growth | 0.1 | 60% | 5% |
Moderate Growth | 0.2 | 20% | 25% |
No Growth | 0.5 | 10% | 5% |
Recession | 0.2 | -25% | 0% |
What are the expected returns and standard deviations for each stock?
Given this information what can you say about the riskiness of each stock relative to the other?
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