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Suppose you observe the following situation: Return if State Occurs State of Probability of State Economy Adroit Beneficial Ltd. Inc. Recession 0.10 -10% -4% Expansion
Suppose you observe the following situation: Return if State Occurs State of Probability of State Economy Adroit Beneficial Ltd. Inc. Recession 0.10 -10% -4% Expansion 0.90 +30% +20% When we ponder forming a portfolio of these two stocks Adroit and Beneficial, we would notice that Adroit is riskier than Beneficial and that the expected returns for the two stocks are: +26% for Adroit and +17.6% for Beneficial Ltd. Using the expected return of Adroit as 26%, what is the Standard Deviation for Adroit Inc? 12% 13.2% 15% O 9.2%
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