Computing expected return and standard deviation

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Reference no: EM1391084

The annual returns, in percentages, on stocks A and B for three possible states of the economy are given in the table below.

Economy State Probability Stock A Stock B

Good 0.5 40 20

Average 0.3 20 40

Bad 0.2 10 8

1. If one invested in Stock A, what would be the expected annual percentage return?

2. If one invested in Stock A, what would be the standard deviation of the percentage return?

Reference no: EM1391084

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