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You are trying to develop a strategy for investing in two different stocks. The anticipated annual return for a $ 1 , 0 0 0
You are trying to develop a strategy for investing in two different stocks. The anticipated annual return for a $ investment in each stock under four different economic conditions has the probability distribution shown to the right. Complete parts a through below.
tableReturnsProbabilityEconomic Condition,Stock XStock YRecession,Slow growth,Moderate growth,Fast growth,
a Compute the expected return for stock and for stock
The expected return for stock is $
Type an integer or a decimal. Do not round.
The expected return for stock is $
Type an integer or a decimal. Do not round.
b Compute the standard deviation for stock and for stock
The standard deviation for stock is $
Round to two decimal places as needed.
The standard deviation for stock is $
Round to two decimal places as needed.
c Would you invest in stock or stock Explain. Choose the correct answer below. risk of stock stock should be invested in risk of stock stock should be invested in
C Based on the expected value, stock should be chosen. However, stock has a larger standard deviation, resulting in a higher risk, which should be taken into consideration.
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