Question: Problem 11-5 Calculating Returns and Standard Deviations You have been given the following information: State of Economy Probability of State of Economy Rate of Return

Problem 11-5 Calculating Returns and Standard Deviations

You have been given the following information:

State of Economy Probability of State of Economy Rate of Return if State Occurs
Stock A Stock B
Recession .18 .07 .18
Normal .55 .10 .11
Boom .27 .15 .28

a. Calculate the expected return for the two stocks. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
b. Calculate the standard deviation for the two stocks. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

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