Consider the following information:Probability of State ofEconomyRate of Return if StateOccursStock A03.08State of EconomyStock B-211335Recession10Normal.6030Boom14Calculate the expected return for Stock A.Answer is complete but not entirely correct.Expected return8.28% 8Calculate the expected return for Stock B.Answer is complete but not entirely correct.Expected return9.00% UAnswer iS compiete Dut not entireiy correct.Expected return9.00% OCalculate the standard deviation for Stock A.Answer is complete but not entirely correct.Standard deviation3.54% OCalculate the standard deviation for Stock B.Answer is complete but not entirely correct.Standard deviation16.46%

Expected return of the stock depends the return under the probabilistic scenario of the different…

onsider the following information: Probability of State of Economy Rate of Return if St Occurs Stoc State of Economy Stock A 10 .60 30 03 Recession Normal Boom 08 14 Iculate the expected return for Stock A. 9 Answer is complete but not entirely correct. pected return 8.28%

onsider the following information: Probability of State of Economy Rate of Return if St Occurs Stoc State of Economy Stock A 10 .60 30 03 Recession Normal Boom 08 14 Iculate the expected return for Stock A. 9 Answer is complete but not entirely correct. pected return 8.28%

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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Question

Consider the following information:
Probability of State of
Economy
Rate of Return if State
Occurs
Stock A
03
.08
State of Economy
Stock B
-21
13
35
Recession
10
Normal
.60
30
Boom
14
Calculate the expected return for Stock A.
Answer is complete but not entirely correct.
Expected return
8.28% 8
Calculate the expected return for Stock B.
Answer is complete but not entirely correct.
Expected return
9.00%

UAnswer iS compiete Dut not entireiy correct.
Expected return
9.00% O
Calculate the standard deviation for Stock A.
Answer is complete but not entirely correct.
Standard deviation
3.54% O
Calculate the standard deviation for Stock B.
Answer is complete but not entirely correct.
Standard deviation
16.46%

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