Calculating Returns and Standard Deviations Based on the following information, calculate the expected return and standard deviation for the two stocks.
|
Rate of Return If State Occurs |
|||
|
State of Economy |
Probability of State of Economy |
Stock A |
Stock B |
|
Recession |
0.1 |
0.04 |
.20 |
|
Normal |
0.65 |
0.09 |
0.13 |
|
Boom |
0.25 |
0.12 |
0.33 |