Question
We know the following expected returns for stocks A and B, given different states of the economy: State (s) Probability E(r A,s ) E(r B,s
We know the following expected returns for stocks A and B, given different states of the economy:
| State (s) | Probability | E(rA,s) | E(rB,s) |
|---|---|---|---|
| Recession | 0.2 | -0.06 | 0.01 |
| Normal | 0.5 | 0.09 | 0.04 |
| Expansion | 0.3 | 0.17 | 0.08 |
Attempt 2/5 for 10 pts.
Part 1
What is the expected return for stock A? (Prev Answer: 0.08)
Attempt 2/5 for 10 pts.
Part 2
What is the expected return for stock B? (Prev Answer: 0.093)
Attempt 2/5 for 10 pts.
Part 3
What is the standard deviation of returns for stock A?(Prev Answer: 0.07)
Attempt 1/5 for 10 pts.
Part 4
What is the standard deviation of returns for stock B?
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Understanding financial statements
Authors: Lyn M. Fraser, Aileen Ormiston
9th Edition
136086241, 978-0136086246
