Question: please answer part 2 right Problem 5 Intro You've estimated the following expected returns for a stock, depending on the strength of the economy: State

please answer part 2 right

Problem 5 Intro You've estimated the following expected returns for a stock, depending on the strength of the economy: State (s) Probability Expected return Recession 0.2 -0.02 Normal 0.5 0.09 Expansion 0.3 0.14 IB Attempt 1/10 for 10 pts. Part 1 What is the expected return for the stock? 8.3% Correct The expected return is the weighted average return across all states of the economy: E(R) = (1,E(R.)) = 0.20 (-0.02) + 0.5 0.09 + 0.3 0.14 0.083 Attempt 3/10 for 8 pts. Part 2 What is the standard deviation of returns for the stock? 3+ deimals Previous answers: 2.75%; 0.0275 Submit

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