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There are two stocks in the market, Stock A and Stock B . The price of Stock A today is $ 8 2 . The

There are two stocks in the market, Stock A and Stock B. The price of Stock A today is $82. The price of Stock A next year will be $71 if the economy is in a recession, $94 if the economy is normal, and $104 if the economy is expanding. The probabilities of recession, normal times, and expansion are .27,.53, and .20, respectively. Stock A pays no dividends and has a correlation of .77 with the market portfolio. Stock B has an expected return of 14.7 percent, a standard deviation of 34.7 percent, a correlation with the market portfolio of .31, and a correlation with Stock A of .43. The market portfolio has a standard deviation of 18.7 percent. Assume the CAPM holds.
a-1. What is the return for each state of the economy for Stock A?(A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g.,32.16.)
a- What is the expected return of Stock A?(Do not round intermediate calculations
2. and enter your answer as a percent rounded to 2 decimal places, e.g.,32.16.)
a- What is the variance of Stock A?(Do not round intermediate calculations and round
3. your answer to 4 decimal places, e.g.,.1616.)
a- What is the standard deviation of Stock A?(Do not round intermediate calculations
4. and enter your answer as a percent rounded to 2 decimal places, e.g.,32.16.)
a- What is the beta of Stock A?(Do not round intermediate calculations and round
5. your answer to 3 decimal places, e.g.,32.161.)
a- What is the beta of Stock B?(Do not round intermediate calculations and round
6. your answer to 3 decimal places, e.g.,32.161.)
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