Required: (a) Calculate the expected return for Stock A. (Do not round your inte

Question

Required:

(a) Calculate the expected return for Stock A. (Do not round your intermediate calculations.)

A.)9.76%

B.)8.69%

C.)8.62%

D.)9.30

E.)9.67%

(b) Calculate the expected return for Stock B. (Do not round your intermediate calculations.)

A.)17.40%

B.)9.33%

C.)18.27%

D.)16.53%

E.)18.10%

(c) Calculate the standard deviation for Stock A. (Do not round your intermediate calculations.)

A.)1.42%

B.)1.47%

C.)1.35%

D.)1.49%

E.)1.00%

(d) Calculate the standard deviation for Stock B. (Do not round your intermediate calculations.)

A.)15.48%

B.)14.89%

C.)14.14%

D.)10.53%

E.)15.63%

A.)9.76%

B.)8.69%

C.)8.62%

D.)9.30

E.)9.67%

Consider the following information: Rate of Return if State Occurs Probability of State of State of Economy Recession Normal Boom 0.10 0.60 0.30 Stock A 0.06 0.09 0.11 Stock B 0.21 0.16 0.33

Explanation / Answer

Probability State of economy return for Stock A Probability * return Variance 0.1 0.06 0.006 0.0001089 0.6 0.09 0.054 5.4E-06 0.3 0.11 0.033 0.0000867 expected return for Stock A 9.30%                        0.000201 Standared deviation =Sqare root of varaince =root of .0000201 =1.42% Probability State of economy return for Stock B Preobability * return Variance 0.1 -0.21 -0.021 0.0147456 0.6 0.16 0.096 0.0001176 0.3 0.33 0.099 0.0073008 expected return for Stock B 17.40% 0.022164 Standared deviation =Sqare root of varaince =root of .022164 =14.89%

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.