Consider the following information: State of Economy Recession Normal Boom Probability of Rate of Return if State of State Occurs Economy 0.3 0.4 0.3 Expected return for A Expected return for B Stock A 0.04 0.09 0.12 Standard deviation for A Standard deviation for B Stock B a. Calculate the expected return for the two stocks. Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. -0.20 0.13 0.33 % % b. Calculate the standard deviation for the two stocks. Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. % %
Consider the following information: State of Economy Recession Normal Boom Probability of Rate of Return if State of State Occurs Economy 0.3 0.4 0.3 Expected return for A Expected return for B Stock A 0.04 0.09 0.12 Standard deviation for A Standard deviation for B Stock B a. Calculate the expected return for the two stocks. Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. -0.20 0.13 0.33 % % b. Calculate the standard deviation for the two stocks. Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. % %
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
Related questions
Question
Consider the following information: a. Calculate the expected return for the two stocks. Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. b. Calculate the standard deviation for the two stocks. Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.
Transcribed Image Text:Consider the following information:
State of
Economy
Recession
Normal
Boom
Probability of Rate of Return if
State of
State Occurs
Economy
0.3
0.4
0.3
Expected return for A
Expected return for B
Stock A
0.04
0.09
0.12
Standard deviation for A
Standard deviation for B
Stock B
a. Calculate the expected return for the two stocks.
Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.
-0.20
0.13
0.33
%
%
b. Calculate the standard deviation for the two stocks.
Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.
%
%
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