Question: Based on the following data; (a) calculate the expected return and the standard deviation of returns for each stock. State of the Economy Probability Stock

  1. Based on the following data; (a) calculate the expected return and the standard deviation of returns for each stock.

State of the Economy Probability Stock A Rate of Return Stock B Rate of Return

Recession 0.2 4% -20%

Normal Growth 0.65 8% 20%

Boom 0.15 16% 60%

(b) Calculate the expected return and the standard deviation on the portfolio, where

the portfolio is formed by investing 50% of the funds in Stock A and the rest in Stock B.

(c) Calculate the expected return and the standard deviation on the portfolio, where

the portfolio is formed by investing 70% of the funds in Stock A and the rest in Stock B.

ONLY C , PLEASE NO EXCEL

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