Question: Problem 2 (6 marks) Consider the following information for the returns of two stocks: DoorDash Inc. (DASH) and The Coca-Cola Company (KO). You consider five

Problem 2 (6 marks) Consider the following information for the returns of two stocks: DoorDash Inc. (DASH) and The Coca-Cola Company (KO). You consider five possible scenarios for the stocks' returns depending on how the economy performs over the coming year. State of Economy Boom Above average Average Below average Recession Probability 0.3 0.2 0.2 0.2 0.1 Rate of Return if State Occurs Return on DASH stock 30% 20% 10% 0% -20% Return on KO stock 8% 8% 10% 12% 15% a) Calculate the expected returns for DASH. (2 marks) b) Calculate the standard deviation for DASH. (2 marks) c) Given the expected return of KO is 9.9%, would you expect the standard deviation of KO to be higher or lower than that of DASH? Briefly explain. (No calculation required) (2 marks)
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