Probability of Rate of Return if State Occurs State of Economy 21 61 Economy Recession Stock A Stock B 040 -31 21 Normal 120 Boom 18 200 .44 a. Calculate the expected return for the two stocks. (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. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Probability of Rate of Return if State Occurs State of Economy 21 61 Economy Recession Stock A Stock B 040 -31 21 Normal 120 Boom 18 200 .44 a. Calculate the expected return for the two stocks. (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. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
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
State
of Economy
Economy
Recession
Stock A
.040
Stock B
21
-31
Normal
.61
120
21
Boom
.18
200
44
a. Calculate the expected return for the two stocks. (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. (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
%
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