Explore BrainMass

Explore BrainMass

    Solve: For the Expected Return

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Please see the attached word document to view the expected return problems.

    Any assistance would be appreciated.

    Consider the following information:

    Rate of Return If State Occurs
    State of Probability of ________________________________________
    Economy State of Economy Stock A Stock B
    Recession 0.17 0.05 − 0.21
    Normal 0.62 0.09 0.08
    Boom 0.21 0.16 0.25
    ________________________________________

    Calculate the expected return for the two stocks. (Round your answers to 2 decimal places. (e.g., 32.16))

    Expected return
    Stock A %

    Stock B %

    ________________________________________

    Calculate the standard deviation for the two stocks. (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))

    Standard deviation
    Stock A %

    Stock B %

    © BrainMass Inc. brainmass.com June 4, 2020, 4:15 am ad1c9bdddf
    https://brainmass.com/business/finance/solve-expected-return-551944

    Attachments

    Solution Preview

    Expected return of A = 0.17 X 0.05 + 0.62 X 0.09 + 0.21 X 0.16 = 0.0979

    Expected return of B = 0.17 X -0.21 + 0.62 X 0.08 + ...

    Solution Summary

    The expected return and standard deviations for the two stocks are given.

    $2.19

    ADVERTISEMENT