Probability of average economy

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Reference no: EM132016031

1. There is a 40.52% probability of a below-average economy and a 59.48% probability of an average economy. If there is a below-average economy, Stocks A and B will have returns of -9.25% and -9.46% , respectively. If there is an average economy, Stocks A and B will have returns of 18.57% and 15.38%, respectively. Compute the following for Stocks A and B:

a) Stock A Expected Return :

b) Stock B Expected Return :

c) Stock A Standard Deviation :

d) Stock B Standard Deviation :

2. A stock has an expected return of 17.25% and a standard deviation of 15.13%. Compute the following for this stock:

a) Upper range of 68% confindence interval :

b) Lower range of 68% confindence interval :

e) Upper range of 95% confindence interval :

d) Lower range of 95% confindence interval :

e) Upper range of 99% confindence interval :

f) Lower range of 99% confindence interval :

Reference no: EM132016031

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