Question: Answer the question based on the information below: State of Economy Probability Stock As return Stock Bs return Boom .4 15% - 30% Recession .6

Answer the question based on the information below:

State of Economy

Probability

Stock As return

Stock Bs return

Boom

.4

15%

- 30%

Recession

.6

5%

40%

Which of the following statements is true?

Group of answer choices:

Stock B has lower expected return than stock A.

A risk neutral (one who does not care about risk) investor will prefer stock B to stock A.

The actual return of stock A will always be greater than that of stock B.

Stock A has higher total risk than stock B.

Stocks A and B are positively correlated.

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