Problem 11-7 Calculating Returns and Standard Deviations [LO 1]

Consider the following information:

		Rate of Return if State Occurs
State of	Probability of State
Economy	of Economy	Stock A	Stock B
Recession	.22	.020	.37
Normal	.57	.100	.27
Boom	.21	.260	.50

Requirement 1:

Calculate the expected return for the two stocks. (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).)

	Expected return
E(RA)	%
E(RB)	%

Requirement 2:

Calculate the standard deviation for the two stocks. (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).)

	Standard deviation
A	%
B	%