P13-7 Calculating Returns and Standard Deviations [LO1]

Consider the following information:

		Rate of Return if State Occurs
State of Economy	Probability of State of Economy	Stock A	Stock B
Recession	0.20	0.05	-0.21
Normal	0.60	0.08	0.14
Boom	0.20	0.12	0.35

Required:

(a)	Calculate the expected return for Stock A. (Do not round your intermediate calculations.)
	which of the following is the answer: 8.28%8.61%8.35%8.20%8.53%

(b)	Calculate the expected return for Stock B. (Do not round your intermediate calculations.)
	Which of the following is the answer 11.20%11.76%10.64%9.33%11.65%

(c)	Calculate the standard deviation for Stock A. (Do not round your intermediate calculations.)
	which of the following is the answer: 2.34%1.57%2.32%2.23%2.12%

(d)	Calculate the standard deviation for Stock B. (Do not round your intermediate calculations.)
	which of the following is the answer: 18.94%18.76%18.04%12.75%17.14%