Question: Problem 13-7 Calculating Returns and Standard Deviations [LO1] Consider the following information: State of Economy Probability of State of Economy Rate of Return if State

Problem 13-7 Calculating Returns and Standard Deviations [LO1]

Consider the following information:

State of Economy Probability of State of Economy Rate of Return if State Occurs
Stock A Stock B
Recession .22 .07 .22
Normal .52 .10 .07
Boom .26 .15 .24

a.

Calculate the expected return for Stocks A and B. (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 Stocks A and B. (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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