Based on the following information, the expected return and standard deviation f

Question

Based on the following information, the expected return and standard deviation for Stock A are _____ percent and ____ percent, respectively. The expected return and standard deviation for Stock B are ____ percent and ____ percent, respectively. (Do not include the percent signs (%). Round your answers to 2 decimal places. (e.g., 32.16))

Rate of Return if State Occurs   State of Economy Probability of State
of Economy Stock A Stock B   Recession 0.1               0.06               -0.2                Normal 0.5               0.08               0.15                Boom 0.4               0.16               0.31             

Explanation / Answer

Expected Return Stock A= .06*.1+.08*.5+.16*.4= .11     = 11% Stock B = -.2*.1+.15*.5+.31*.4 = .289    = 28.9%

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