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You have three stocks with the following return distribution You have three stocks with the following return distribution State of the Economy Probability of State

You have three stocks with the following return distribution
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You have three stocks with the following return distribution State of the Economy Probability of State of Economy Rate of return if state occurs Stock A Stock B Stock C Boom 0.20 8% 17% 10% Normal 0.75 11% Recession 0.05 8% Expected Return 10.55 6.9 Variance 25 2.05 2.59 A. Which stock has a better return/risk profile? Explain using supporting metrics. B. Why would you include all these in your portfolio? Explain intuitively by looking at the data relationships. - Format B I V

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