Problem 11-5 Calculating Returns and Standard Deviations You have been given the following information: State of Economy Recession Normal Boom Probability of State of Rate of Return if State Occurs Economy Stock A Stock B .17 .08 -12 .58 .11 .17 .25 16 .34 a. Calculate the expected return for the two stocks. (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 the two stocks. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Answer is not complete. a. Stock A expected return a. Stock B expected return b. Stock A standard deviation b. Stock B standard deviation 11.74% 16.32 % % %
Problem 11-5 Calculating Returns and Standard Deviations You have been given the following information: State of Economy Recession Normal Boom Probability of State of Rate of Return if State Occurs Economy Stock A Stock B .17 .08 -12 .58 .11 .17 .25 16 .34 a. Calculate the expected return for the two stocks. (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 the two stocks. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Answer is not complete. a. Stock A expected return a. Stock B expected return b. Stock A standard deviation b. Stock B standard deviation 11.74% 16.32 % % %
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
Problem 1PS
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am. 134.
Transcribed Image Text:Problem 11-5 Calculating Returns and Standard Deviations
You have been given the following information:
State of
Economy
Recession
Normal
Boom
Probability of
State of
Rate of Return if State Occurs
Economy
Stock A
Stock B
.17
.08
-12
.58
.11
.17
.25
16
.34
a. Calculate the expected return for the two stocks. (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 the two stocks. (Do not round intermediate
calculations and enter your answers as a percent rounded to 2 decimal places, e.g.,
32.16.)
Answer is not complete.
a. Stock A expected return
a. Stock B expected return
b. Stock A standard deviation
b. Stock B standard deviation
11.74%
16.32
%
%
%
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