Expected Return and Risk
Following are four economic states, their likelihoods, and the potential returns:
Economic State Probability Return
Fast growth 0.21 53 %
Slow growth 0.60 13
Recession 0.12 –22
Depression 0.07 –55
Compute the expected return and standard deviation. (Do not round intermediate calculations and
round your answers to 2 decimal places.)
Expected return %
Standard deviation %