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There is a 11.75% probability of a below-average economy and a 88.25% probability of an average economy. If there is a below-average economy, Stocks A
There is a 11.75% probability of a below-average economy and a 88.25% probability of an average economy. If there is a below-average economy, Stocks A and B will have returns of -4.08% and -7.58% , respectively. If there is an average economy, Stocks A and B will have returns of 11.55% and 15.96%, respectively. Compute the following for Stocks A and B: (Please write all answers as percentages (e.g. .1234 should be written as 12.34):
- Stock A Expected Return: %
- Stock B Expected Return: %
- Stock A Standard Deviation: %
- Stock B Standard Deviation: %
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