Question: Based on the information provided in the following table, answer the questions that follow. State of economy Probability Return on asset A Return on asset

Based on the information provided in the following table, answer the questions that follow.

State of economy

Probability

Return on asset A

Return on asset B

Boom

.40

-6%

30%

Bust

.60

35%

-5%

1.00

a) What is the expected return for each of the two assets? (2 marks) b) What is the standard deviation of each asset? (3 marks)

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