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In: Finance

State of Nature………..Probability…………….State Dependent Return A………….State Dependent Return B Recession……………………..70%................................-0.08………………………………………………-0.04 Expansion.....................30%.................................0.28………………………

State of Nature………..Probability…………….State Dependent Return A………….State Dependent Return B

Recession……………………..70%................................-0.08………………………………………………-0.04

Expansion.....................30%.................................0.28……………………………………………….0.16

What comes closest to the variance of Stock A and the standard deviation of Stock B?

a.

Variance of Stock A = .0115, Standard deviation of Stock B = .0917
b.

Variance of Stock A = .0272, Standard deviation of Stock B = .1033
c.

Variance of Stock A = .0000, Standard deviation of Stock B = .0000
d.

Variance of Stock A = .0115, Standard deviation of Stock B = .1033
e.

Variance of Stock A = .0272, Standard deviation of Stock B = .0917

a or e?

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Expert Solution

jeff jeffy answered 6 months ago
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