Security Returns if State Occurs State of Economy Probability of State of Economy Roll Ross Bust .60 9 % 13 % Boom .40 20   5       Calculate the standard deviations for Roll and Ross by filling in the following table: (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 4 decimal places.)       State of Economy Probability of State of Economy Return Deviation from Expected Return Squared Return Deviation Product Roll         Bust .60 ? ? ? Boom .40 ? ? ?       σ2 = ?           Ross         Bust .60 ? ? ? Boom .40 -0.0480 0.0023 ?

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Consider the following information: State of Economy Boom Good Poor Bust Probability of State- of Economy a. Expected return b-1. Variance b-2. Standard deviation 15 .45 .35 .05 Rate of Return if State Occurs Stock A Stock B Stock C .37 .47 .22 .18 -.04 -.18 % -.07 -.22 a. Your portfolio is invested 20 percent each in A and C, and 60 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b-1. What is the variance of this portfolio? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., .16161.) b-2. What is the standard deviation? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) % 27 11 -.05 -.08

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Use the following information on states of the economy and stock returns to calculate the expected return and the standard deviation of returns. Assume that all three states are equally likely. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) State of Economy Security Return If State Occurs Recession -8 % Normal 13 Boom 23

Compute the expected return given these three economic states, their likelihoods, and the potential returns: (Round your answer to 2 decimal places.) Economic State Fast growth Slow growth Recession Probability 0.32 Return 38% 0.34 12 0.34 -31 Answer is complete but not entirely correct. Expected return 3.84%

Consider the following information: Rate of Return if State Occurs State of Economy Probability of State of Economy Stock A Stock B Recession 21 .06 21 Normal 58 109 08 Boom 21 14 25 a. Calculate the expected return for Stocks A and B. (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 Stocks A and B. (Do not round Intermedlate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) a. Stock A expected return a. Stock B expected return b. Stock A standard deviation b. Stock B standard deviation 196 96 96 %

Consider the following information: Probability of State of Economy .22 .57 .21 Economy Recession Normal Boom Rate of Return if State Occurs. Stock A Stock B a. Expected return of A Expected return of B b. Standard deviation of A Standard deviation of B .020 .100 160 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. % % -.27 .17 .40 % %

Consider the following information: State of Economy Recession. Normal Boom Probability of State of Economy .17 .58 .25 Rate of Return if State Occurs Stock A Stock B .08 -.12 11 .17 .34 a. Stock A expected return a. Stock B expected return b. Stock A standard deviation b. Stock B standard deviation a. Calculate the expected return for Stocks A and B. (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 Stocks A and B. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) .16 Answer is complete but not entirely correct. 9.86 % 21.46 % 7.70 % 9.50 %

Following are three economic states, their likelihoods, and the potential returns: Economic State Fast growth Slow growth Recession Probability 0.27 0.35 0.38 Standard deviation Return 32% 4 -22 Determine the standard deviation of the expected return. (Do not round intermediate calculations and round your answe decimal places.) %