Consider the following information:
Probability of State Rate of Return if State Occurs Economy of Economy Stock A Stock B
Recession .21 .040 – .41 Normal .61 .120 .31 Boom .18 .300 .54 a. Calculate the expected return for the two stocks. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Expected return
E(RA) %
E(RB) %
b. Calculate the standard deviation for the two stocks. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Standard deviation
σA %
σB %