Question: 1) What is the expected return for stock A? 2) What is the expected return for stock B? 3) What is the standard deviation of

1) What is the expected return for stock A? 2) What

1) What is the expected return for stock A?

2) What is the expected return for stock B?

3) What is the standard deviation of returns for stock A?

4)What is the standard deviation of returns for stock B?

Intro We know the following expected returns for stocks A and B, given different states of the economy: State (s) Probability E(rA,s) E(rB,s) Recession Normal Expansion 0.3 -0.02 0.03 0.5 0.13 0.06 0.2 0.21 0.1

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