State of the economy	Probability of Occurrence	Expected Return on Stock A in this state	Expected Return on Stock B in this state
High growth	0.15	44%	32%
Medium growth	0.30	30%	21%
No growth	0.25	12%	8%
Economic slowdown	0.20	3%	4%
Recession	0.10	-10%	1%

Consider below the expected rate of return on Stock A and Stock B under different possible states of the economy:



a. Calculate the expected rate of return for stock A and stock B. 

b. Calculate the standard deviation for stock A and stock B. 

Answer rating: 100% (QA)

a To calculate the expected rate of return for Stock A and Stock B we use the formula Expected Ret... View the full answer