You are trying to develop a strategy for investing in two different stocks. The anticipated annual return for a $1,000 investment in each stock under four different economic conditions has the probability distribution shown to the right. Complete parts (a) through (c) below.
You are trying to develop a strategy for investing in two different stocks. The anticipated annual return for a $1,000 investment in each stock under four different economic conditions has the probability distribution shown to the right. Complete parts (a) through (c) below.
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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looking for help solving standard deviation for stock x and stock y, preferably with instructions on how to solve in excel.
Transcribed Image Text:5.1.7
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You are trying to develop a strategy for investing in two different stocks. The anticipated
annual return for a $1,000 investment in each stock under four different economic
conditions has the probability distribution shown to the right. Complete parts (a) through ProbabilityCondition
(c) below.
Returns
Economic
Stock X Stock Y
0.1
Recession
- 130
- 150
Slow growth
Moderate growth
Fast growth
0.2
20
50
0.4
90
140
0.3
160
190
a. Compute the expected return for stock X and for stock Y.
The expected return for stock X is 75.00 .
(Type an integer or a decimal.)
The expected return for stock Y is 108.00 .
(Type an integer or a decimal.)
b. Compute the standard deviation for stock X and for stock Y.
The standard deviation for stock X is
(Round to two decimal places as needed.)
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