Consider the following two stocks. Probabilities (pi) StockA Stock B Recession p1=24% -9% 1% Normal p2=40% 4%
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Question:
Consider the following two stocks.
| Probabilities (pi) | Stock"A" | Stock "B" | |
| Recession | p1=24% | -9% | 1% |
| Normal | p2=40% | 4% | -15% |
| Boom | p3=36% | 14% | 20% |
What is the expected return of each stock? Enter your answers as a percentage rounded to 2 decimal places. Do not enter the percentage sign in your answer.
What are the standard deviations of stocks "A" and "B"? Enter your answers as a percentage. Do not put the percent sign in your answers. Round your answers to 2 DECIMAL PLACES.
Expert Answer:
To calculate the expected return of each stock we need to multiply each probability by its respectiv... View the full answer
Related Book For 
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
