Calculating returns and standard deviations: Based on the following information, calculate the expected return and standard deviation for the two stocks.
State of economy
|
Probability of state economy
|
Rate of Return if state occurs Stock A
|
Rate of Return if state occurs Stock B
|
Recession
|
.30
|
.02
|
-.20
|
Normal
|
.55
|
.08
|
.13
|
Boom
|
.30
|
.13
|
.33
|