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

Consider the following information:

				Rate of Return If State Occurs
State of	Probability of
Economy	State of Economy			Stock A			Stock B
Recession		.16			.04			.20
Normal		.61			.08			.09
Boom		.23			.15			.26

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

	Expected return
Stock A	%
Stock B	%

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

	Standard deviation
Stock A	%
Stock B	%

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