You are trying to develop a strategy for investing in two different stocks. The anticipated annual return for a$1,000 investment in each stock under four different economic conditions has the probability distribution shown to the right.
Probability Economic Condition Stock X Stock Y
0.2 Recession -50 -80
0.1 Slow_growth 10 25
0.3 Moderate_growth 110 130
0.4 Fast_growth 160 225
Compute the expected return for stock X and for stock Y.
Compute the standard deviation for stock X and for stock Y.
Compute the covariance of stock X and stock Y.
Risk averse investors would invest stock in _____ because it has (higher or lower) expected return whereas risk takers would invest in___