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    Stocks: Expected Return and Standard Deviation

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    You are trying to develop a strategy for investing in two different stocks. The anticipated annual return for $1000 investment in each stock under four different economic conditions has the following probability distribution:

    Returns
    Probability Economic Condition Stock X (in $'s) Stock Y (in $'s)
    0.1 Recession - 50 - 100
    0.3 Slow growth 20 50
    0.4 Moderate growth 100 130
    0.2 Fast growth 150 200

    Note: Return means the net change in your initial investment ($1000) after a year, for example, Return=-100 (negative return), it means that after one year, your wealth become $900.

    (a) Compute the expected return for stock X and for stock Y.
    (b) Compute the standard deviation for stock X and for stock Y.

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    https://brainmass.com/statistics/conditional-probability-distribution/stocks-expected-return-standard-deviation-351701

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    Problem: You are trying to develop a strategy for investing in two different stocks. The anticipated annual return for $1000 investment in each stock for four different economic conditions has the following probability ...

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