The annual returns in percentages on stocks a and b for, Ask an Expert

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The annual returns, in percentages, on stocks A and B for three possible states of the economy are given in the table below.

Economy State Probability Stock A Stock B

Good 0.5 40 20

Average 0.3 20 40

Bad 0.2 10 8

1. If one invested in Stock A, what would be the expected annual percentage return?

2. If one invested in Stock A, what would be the standard deviation of the percentage return?

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Category:- Statistics and Probability
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