An analyst has predicted the following returns for Stock A and Stock B in three possible states of the economy. Probability 0.3 0.5 State A В Вoom Normal 0.25 0.20 0.15 0.10 Recession 0.02 0.01 a. What is the probability of a recession? (Round your answer to 2 decimal places.) Probability b. Calculate the expected return for Stock A and Stock B. (Round your answers to 1 decimal place.) Expected Return Stocks A Stocks B % c. Calculate the expected return for a portfolio that is invested 55% in A and 45% in B. (Round your answer to 2 decimal places.) Expected return %

An analyst has predicted the following returns for Stock A and Stock B in three possible states of the economy. Probability 0.3 0.5 State A В Вoom Normal 0.25 0.20 0.15 0.10 Recession 0.02 0.01 a. What is the probability of a recession? (Round your answer to 2 decimal places.) Probability b. Calculate the expected return for Stock A and Stock B. (Round your answers to 1 decimal place.) Expected Return Stocks A Stocks B % c. Calculate the expected return for a portfolio that is invested 55% in A and 45% in B. (Round your answer to 2 decimal places.) Expected return %

Algebra & Trigonometry with Analytic Geometry

13th Edition

ISBN:9781133382119

Author:Swokowski

Publisher:Swokowski

Chapter10: Sequences, Series, And Probability

Section10.8: Probability

Problem 68E

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