What is difference between expected returns of these stocks

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Assume the economy can only be in two states. It can either be booming or in recession. The probability that the economy will boom is 54%. You are considering investing in either Stock A or Stock B. If the economy booms, then the return of Stock A would be 9%, and the return of Stock B would be -11.3%. In a recession, the return of Stock A would be -7.5%, and the return of Stock B would be -9.4%. What is the difference between the expected returns of these stocks? Your answer must be the result of the expected return of Stock A minus the expected return of Stock B.

Reference no: EM131185389

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