Probability of State of Economy State of Economy Recession .20 Normal .50 Boom .30 Iculate the expected return for Stock A. Rate of Return if State Occurs Stock A .03 .08 12 Stock B -.19 15 .35
Probability of State of Economy State of Economy Recession .20 Normal .50 Boom .30 Iculate the expected return for Stock A. Rate of Return if State Occurs Stock A .03 .08 12 Stock B -.19 15 .35
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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am. 123.

Transcribed Image Text:Consider the following information:
State of Economy
Recession
Normal
Boom
Expected return
Calculate the expected return for Stock A.
Expected return
Probability of State of
Economy
Calculate the expected return for Stock B.
.20
.50
.30
Standard deviation
Standard deviation
Rate of Return if State
Occurs
Calculate the standard deviation for Stock A.
Stock A
.03
.08
12
Calculate the standard deviation for Stock B.
Stock B
-.19
15
.35
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