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Consider the following information: Probability of State Rate of Return if State Occurs Economy of Economy Stock A Stock B Recession .21 .040 – .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.)

Expected return E(RA) %

E(RB) %

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.)

Standard deviation σA %

σB%

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92386697

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