Question

Problem 13-7 Calculating Returns and Standard Deviations (LO1] Consider the following information: Rate of Return If State Occurs State of Probability of - State of Stock A Stock B Recession 15 - .10 Normal 56 .09 Boom Economy Economy .06 29 14 30 a. Calculate the expected return for Stocks A and B. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the standard deviation for Stocks A and B. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Stock A expected return Stock B expected return Stock A standard deviation Stock B standard deviation

Answer 1

Page no Date:/ Stock A Badady Raturm limy) dx x-2c oc) -4 15 2.4 -1 S6 S6 14 4.64 .29 Variamca (EPd)760 y Expartad Return ) I5 xC+56x3.2s xi EPx) Standand dewatiam Vaniamce 7.60 21 2.76

Stock B olehaly Relunm lim) Pdyz dyy- (P) -10 .IS - 29.58 131- 246466 19 128 384 S6 - 58 29 |6 . ५२ 36 78 1887S 6 Variance (EPd) - 203.6236 Expadad Return -19.58/ is Y-10)5619) + .29 Ks6 EPX y) 209.6236 mdand Oeniatiaas ariance |48ר +. 2)

Stock A Stock B Stock A Stamdand Dewiatiam Stack Stamdand Deuiatiam Expaclad Retusrm Expartad Returm a) 19.S8 bl 2.161 |५.५४४.