5 Consider the following information: Probability of Rate of Return if State Occurs Economy Recession State of Economy Stock A Stock B .22 .045 -.42 Normal Boom .62 .16 .125 .32 .310 .55 a. Calculate the expected return for the two stocks. Note: 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. Note: Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. Expected return of A Expected return of B b. Standard deviation of A Standard deviation of B 96 96 96 96

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
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5
Consider the following information:
Probability of
Rate of Return if State Occurs
Economy
Recession
State of Economy
Stock A
Stock B
.22
.045
-.42
Normal
Boom
.62
.16
.125
.32
.310
.55
a. Calculate the expected return for the two stocks.
Note: 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.
Note: Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.
Expected return of A
Expected return of B
b. Standard deviation of A
Standard deviation of B
96
96
96
96
Transcribed Image Text:5 Consider the following information: Probability of Rate of Return if State Occurs Economy Recession State of Economy Stock A Stock B .22 .045 -.42 Normal Boom .62 .16 .125 .32 .310 .55 a. Calculate the expected return for the two stocks. Note: 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. Note: Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. Expected return of A Expected return of B b. Standard deviation of A Standard deviation of B 96 96 96 96
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