MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
6th Edition
ISBN: 9781119256830
Author: Amos Gilat
Publisher: John Wiley & Sons Inc
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You are trying to develop a strategy for investing in two different stocks. The anticipated annual return for a​ $1,000 investment in each stock under four different economic conditions has the probability distribution shown to the right. Table of values is given in picture.

               

A.Compute the expected return for stock X and stock Y.

B.Compute the standard deviation for stock X and stock Y.

C.Would you invest in Stock Y or Stock X.?

 

Returns
Economic
ProbabilityCondition
Recession
Slow growth
Moderate growth
Fast growth
Stock X Stock Y
0.1
- 110
- 180
0.2
20
50
0.4
90
150
0.3
160
190
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Transcribed Image Text:Returns Economic ProbabilityCondition Recession Slow growth Moderate growth Fast growth Stock X Stock Y 0.1 - 110 - 180 0.2 20 50 0.4 90 150 0.3 160 190
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