Consider the following information: Economy Recession Normal Boom Probability of State of Economy .23 .58 .19 Rate of Return if State Occurs Stock B a. Expected return of A Stock A .025 .105 .270 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. -.38 .28 .51 %
Consider the following information: Economy Recession Normal Boom Probability of State of Economy .23 .58 .19 Rate of Return if State Occurs Stock B a. Expected return of A Stock A .025 .105 .270 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. -.38 .28 .51 %
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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Transcribed Image Text:Consider the following information:
Economy
Recession
Normal
Boom
Probability of
State of Economy
.23
.58
.19
Rate of Return if State Occurs
Stock B
a. Expected return of A
Expected return of B
b. Standard deviation of A
Standard deviation of B
Stock A
.025
.105
.270
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.
-.38
.28
.51
%
%
%
%
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