Question: The following table shows the expected returns from six different stocks in three different states of the economy: MAY YOU SHOW EXCEL WORK State of

The following table shows the expected returns from six different stocks in three different states of the economy: MAY YOU SHOW EXCEL WORK

State of Economy

Probability

Return Stock A

Return Stock B

Return Stock C

Return Stock D

Return Stock E

Return Stock F

Growth

1/3

30%

3%

15%

24%

0%

18%

Status Quo

1/3

22%

1%

3%

6%

3%

3%

Recession

1/3

20%

4%

-3%

-6%

6%

-3%

  1. Calculate the expected return for each stock.

  1. Calculate the standard deviation for each stock.

State of Economy Probability Return for Stock A Return for Stock B Return for Stock C Return for Stock D Return for Stock E Return for Stock F
Growth 1/3 30% 3% 15% 24% 0% 18%
Status Quo 1/3 22% 1% 3% 6% 3% 3%
Recession 1/3 20% 4% -3% -6% 6% -3%
A) Expected Returns
E[RA] E[RB] E[RC] E[RD] E[RE] E[RF]
B) Standard Deviations
A B C D E F

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