11-12

Problem 11-8 Calculating Returns and Standard Deviations (L01, CFA2) Consider the following information: State of Economy Recession Normal Boom Rate of Return If State Occurs Probability of State of Economy Stock A Stock B 0.3 0.04 -0.20 0.4 0.09 0.13 0.3 0.12 0.33 a. Calculate the expected return for the two stocks. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Expected return for A Expected return for B b. Calculate the standard deviation for the two stocks. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Standard deviation for A Standard deviation for B