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You have done your research for the following investments and your friend has provided their expectations for the markets for next year. State of Economy
You have done your research for the following investments and your friend has provided their expectations for the markets for next year.
State of Economy | Probability of State of Economy |
Stock A |
Stock B |
Stock C |
Stock D |
T-bills |
Stock Market |
Boom | .30 | 20% | 25% | 20% | -10% | 3% | 20% |
Normal | .40 | 15% | 12% | 16% | 15% | 3% | 15% |
Recession | .30 | -16% | -15% | -8% | 25% | 3% | -8% |
- Calculate the expected return for stock A.
- Calculate the expected return for stock B.
- Calculate the expected return for stock C.
- Calculate the expected return for stock D.
- Calculate the expected return for T-bills.
- Calculate the expected return for the stock market.
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