Consider the following information: State of Economy Economy Probability of State of Rate of Return if State Occurs Stock A Stock B Recession 0.20 0.05 -0.20 Normal 0.40 0.10 k 0.10 Boom 0.40 0.13 0.25 ces a. Calculate the expected return for the two stocks. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Expected return for A Expected return for B % % b. Calculate the standard deviation for the two stocks. (Do not round your intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Standard deviation for A % Standard deviation for B %
Consider the following information: State of Economy Economy Probability of State of Rate of Return if State Occurs Stock A Stock B Recession 0.20 0.05 -0.20 Normal 0.40 0.10 k 0.10 Boom 0.40 0.13 0.25 ces a. Calculate the expected return for the two stocks. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Expected return for A Expected return for B % % b. Calculate the standard deviation for the two stocks. (Do not round your intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Standard deviation for A % Standard deviation for B %
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: \table[[State of,Probability of,\table[[
Transcribed Image Text:Consider the following information:
State of
Economy
Economy
Probability of
State of
Rate of Return
if State Occurs
Stock A Stock B
Recession
0.20
0.05
-0.20
Normal
0.40
0.10
k
0.10
Boom
0.40
0.13
0.25
ces
a. Calculate the expected return for the two stocks. (Do not round intermediate calculations. Enter your answers as a percent
rounded to 2 decimal places.)
Expected return for A
Expected return for B
%
%
b. Calculate the standard deviation for the two stocks. (Do not round your intermediate calculations. Enter your answers as a
percent rounded to 2 decimal places.)
Standard deviation for A
%
Standard deviation for B
%
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