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Intro We know the following expected returns for stocks A and B, given different states of the economy: State (s) Probability E(rA,s) E(TB,s) Recession 0.3 -0.06 0.04 Normal 0.5 0.07 Expansion 0.2 0.11 0.09 0.17

Intro We know the following expected returns for stocks A and B, given different states of the economy: State (s) Probability E(rA,s) E(TB,s) Recession 0.3 -0.06 0.04 Normal 0.5 0.07 Expansion 0.2 0.11 0.09 0.17

Essentials Of Investments
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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1) what is the expected return rate for stock A

2) what is the expected return rate for stock B
3) what is the standard deviation of returns for stock A
4) what is the standard deviation of returns for stock B. 
Intro We know the following expected returns for stocks A and B, given different states of the economy: State (s) Probability E(TA,s) E(rB,s) Recession 0.3 -0.06 0.04 Normal 0.5 0.09 0.07 Expansion 0.2 0.17 0.11
Transcribed Image Text:Intro We know the following expected returns for stocks A and B, given different states of the economy: State (s) Probability E(TA,s) E(rB,s) Recession 0.3 -0.06 0.04 Normal 0.5 0.09 0.07 Expansion 0.2 0.17 0.11
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