You have been given the following information: State of Economy Recession Normal Boom Probability of State of Rate of Return if State Occurs Economy Stock A Stock B .18 .07 -.18 .55 .10 .11 .27 .15 .28 a. Calculate the expected return for the two stocks. (Do not round intermediate
You have been given the following information: State of Economy Recession Normal Boom Probability of State of Rate of Return if State Occurs Economy Stock A Stock B .18 .07 -.18 .55 .10 .11 .27 .15 .28 a. Calculate the expected return for the two stocks. (Do not round intermediate
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:You have been given the following information:
State of
Economy
Recession
Normal
Boom
Probability of
Rate of Return if State Occurs
State of
Economy
Stock A
Stock B
.18
.07
-.18
.55
.10
.11
.27
.15
.28
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. Stock A expected return
%
a. Stock B expected return
%
b. Stock A standard deviation
%
b. Stock B standard deviation
%
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