Calculating Returns and Standard Deviations 11.6 Based on the following information, calculate the expected return and standard deviation for the two stocks: State of economy Recession Normal Boom Depression Recession Normal Boom Probability of state of economy 11.7 Based on the following information, calculate the expected return and standard deviation: State of economy Probability of state of economy Rate of return if state occurs 0.10 -0,105 0.25 0.059 0.45 0.20 Returns and Standard Deviations 11.9 Consider the following information: State of economy Boom Bust. 0.20 0.55 0.25 Rate of return if state occurs Stock A Stock B -0.20 0.13 0.33 Calculating Expected Returns 11.8 A portfolio is invested 10 percent in stock G, 65 percent in stock J. and 25 percent in stock K. The expected returns on these stocks are 9 percent. 11 percent, and 14 percent, respectively. What is the portfolio's expected return? How do you interpret your answer? Probability of state of economy 0.65 0.35 0.06 0.07 0.11 0.130 0.211 Rate of return if state occurs Stock A Stock B Stock C 0.07 0.15 0.13 0.03 0.33 -0.06 a. What is the expected return on an equally weighted portfolio of these three stocks? b. What is the variance of a portfolio invested 20 percent each in A and B. and 60 percent in C?