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: 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 %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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
%
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