Question: Problem 4 Intro We know the following expected returns for stocks A and B, given different states of the economy: State (s) Probability E(r A,s

Problem 4

Intro

We know the following expected returns for stocks A and B, given different states of the economy:

State (s) Probability E(rA,s) E(rB,s)
Recession 0.3 -0.05 0.05
Normal 0.5 0.1 0.08
Expansion 0.2 0.18 0.12

Attempt 1/3 for 10 pts.

Part 1

What is the expected return for stock A?

Submit

Attempt 1/3 for 10 pts.

Part 2

What is the expected return for stock B?

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