Question 1 pts There is a 46% probability of a below average economy and a 54% p

Question

Question 1 pts There is a 46% probability of a below average economy and a 54% probability of an average economy. If there is a below average economy stocks A and B will have returns of-5% and-8%, respectively. If there is an average economy stocks A and B will have returns of 13% and 14%, respectively, Calculate the expected returns and standard deviations of stocks A and B. Stock A Expected Return (4 decimals: Stock B Expected Return (4 decimals Stock A Standard Deviation (4 decimals): Stock B Standard Deviation (4 decimals);

Explanation / Answer

stock A:

stock B:

from above:

stock A expected return =4.72

stock B expected return =3.88

stock A std deviation =8.9712

stock B std deviation =10.9647

x p(x) xP(x) (x-)2 (x-)2P(x) -5 0.46 -2.300 94.478 43.460 13 0.54 7.020 68.558 37.022 total 1 = 4.72 163.037 2= 80.4816 std deviation=     =    2 = 8.9712

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