Economy Recession Normal Boom Probability of State of Economy .24 .64 .12 Rate of Return if State Occurs Stock A Stock B .855 -.44 .135 .34 .330 .57 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. a. Expected return of A Expected return of B b. Standard deviation of A Standard deviation of B 96 % 96 96
Economy Recession Normal Boom Probability of State of Economy .24 .64 .12 Rate of Return if State Occurs Stock A Stock B .855 -.44 .135 .34 .330 .57 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. a. Expected return of A Expected return of B b. Standard deviation of A Standard deviation of B 96 % 96 96
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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Transcribed Image Text:Consider the following information:
Probability of
Rate of Return if State Occurs
Economy
Recession
State of Economy
Stock A
Stock B
.24
.055
-.44
Normal
Boom
.64
12
.135
.330
.34
.57
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 Intermedlate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.
a. Expected return of A
Expected return of B
b. Standard deviation of A
Standard deviation of B
96
96
96
96
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