You are trying to develop a strategy for investing in two different stocks. The anticipated annual return for a $1,000 investment in each stock under four different economic conditions has the probability distribution shown to the right. Complete parts (a) through (c) below.

		Returns
Probability	Economic Condition	Stock X	Stock Y
0.1	Recession	110		200
0.2	Slow growth	20		50
0.4	Moderate growth	100		130
0.3	Fast growth	170		210

A.Compute the expected return for stock X and for stock Y.

The expected return for stock X is ___________

(Type an integer or a decimal. Do not round.)

The expected return for stock Y is ___________

(Type an integer or a decimal. Do not round.)

B.Compute the standard deviation for stock X and for stock Y.

The standard deviation for stock X is ____________

(Round to two decimal places as needed.)

The standard deviation for stock Y is ____________

(Round to two decimal places as needed.)

C.Would you invest in stock X or stock Y? Explain.

Choose the correct answer below.

a.Since the expected values are approximately the same, either stock can be invested in. However, stock

X has a larger standard deviation, which results in a higher risk. Due to the higher risk of stock X, stock Y should be invested in.

b.Based on the expected value, stock X should be chosen. However, stock X has a larger standard deviation, resulting in a higher risk, which should be taken into consideration.

c.Since the expected values are approximately the same, either stock can be invested in. However, stock

Y has a larger standard deviation, which results in a higher risk. Due to the higher risk of stock

Y, stock X should be invested in

d.Based on the expected value, stock Y should be chosen. However, stock Y has a larger standard deviation, resulting in a higher risk, which should be taken into consideration.