Consider the following information: Rate of Return if State Occurs State of Economy Probability of State of Economy Stock A Stack B Recession 20 05 -.18 Normal 55 .08 11 Boom 25 13 28 a. Calculate the expected return for Stocks A and B. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the standard deviation for Stocks A and B. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) a. Stock A expected return a. Stock B expected return b. Stock A standard deviation b. Stock B standard deviation 8.65 % 9.45 % % %

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Raghubhai 

Consider the following information:
Rate of Return if State Occurs
State of Economy
Probability of State
of Economy
Stock A
Stack B
Recession
20
05
-.18
Normal
55
.08
11
Boom
25
13
28
a. Calculate the expected return for Stocks A and B. (Do not round intermediate
calculations and enter your answers as a percent rounded to 2 decimal places, e.g.,
32.16.)
b. Calculate the standard deviation for Stocks A and B. (Do not round intermediate
calculations and enter your answers as a percent rounded to 2 decimal places, e.g.,
32.16.)
a. Stock A expected return
a. Stock B expected return
b. Stock A standard deviation
b. Stock B standard deviation
8.65 %
9.45 %
%
%
Transcribed Image Text:Consider the following information: Rate of Return if State Occurs State of Economy Probability of State of Economy Stock A Stack B Recession 20 05 -.18 Normal 55 .08 11 Boom 25 13 28 a. Calculate the expected return for Stocks A and B. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the standard deviation for Stocks A and B. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) a. Stock A expected return a. Stock B expected return b. Stock A standard deviation b. Stock B standard deviation 8.65 % 9.45 % % %
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