The standard deviation of returns is a measure of total tisk. Suppose you are provided the following information on returns for stocks A and slóck B in Ihrae p8ssible states of the economy State Probability Boom 0.5 0.25 01 Normal 0.2 02 0.3 Recession 0.05 0.4 The probability in recession is The expected retum for stock Ais (Round your answer to two decimal places) The varlance for stock Ain (Round your answer to four decimal places) The expected return for stock B is (Round your answer to two decimal places) The variance for stock B is (Round your answer to four decimal places) The standard deviation for stock Ais while the standard deviation for stock B is (Round your answers to four decimal places)

Calculus For The Life Sciences
2nd Edition
ISBN:9780321964038
Author:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.
Publisher:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.
Chapter13: Probability And Calculus
Section13.CR: Chapter 13 Review
Problem 8CR
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The standard deviation of returns is a measure of total risk. Suppose you are provided the following information on returns for stocks A and stock B in three possible
states of the economy
State
Probability
A
Boom
0.5
0.25
0.1
Normal
0.2
02
0.3
Recession
0.05
0.4
The probability in recession is
The expected return for stock Ais (Round your answer to two decimal places.)
The varlance for stock Ais (Round your answer to four decimal places)
The expected return for stock B is (Round your answer to two decimal places)
The variance for stock B is (Round your answer to four decimal places)
The standard deviation for stock Aiswhile the standard deviation for stock B is (Round your answers to four decimal places)
Stockhas more total risk
Transcribed Image Text:The standard deviation of returns is a measure of total risk. Suppose you are provided the following information on returns for stocks A and stock B in three possible states of the economy State Probability A Boom 0.5 0.25 0.1 Normal 0.2 02 0.3 Recession 0.05 0.4 The probability in recession is The expected return for stock Ais (Round your answer to two decimal places.) The varlance for stock Ais (Round your answer to four decimal places) The expected return for stock B is (Round your answer to two decimal places) The variance for stock B is (Round your answer to four decimal places) The standard deviation for stock Aiswhile the standard deviation for stock B is (Round your answers to four decimal places) Stockhas more total risk
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