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	0.04	-0.21
Normal	0.50	0.07	0.14
Boom	0.30	0.12	0.32

Required:

(a)	Calculate the expected return for Stock A. (Do not round your intermediate calculations.)
	(Click to select) 7.69% 8.22% 7.62% 7.90% 8.30%

(b)	Calculate the expected return for Stock B. (Do not round your intermediate calculations.)
	(Click to select) 13.02% 11.78% 12.40% 8.33% 12.90%

(c)	Calculate the standard deviation for Stock A. (Do not round your intermediate calculations.)
	(Click to select) 2.06% 2.91% 2.77% 3.03% 3.06%

(d)	Calculate the standard deviation for Stock B. (Do not round your intermediate calculations.)
	(Click to select) 17.51% 19.35% 13.03% 19.17% 18.43%