The Lubin’s Investment Team is considering investing in two securities, A and B, and the relevant...

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Finance

The Lubin’s Investment Team is considering investing in twosecurities, A and B, and the relevant information is givenbelow:
State of the economy
Probability
Return on A(%)
Return on B(%)
Trough
0.05
-20%
2%
Recession
0.4
-5%
2%
Expansion
0.5
15%
2%
Peak
0.05
20%
2%
Calculate the expected return andstandard deviation of two securities.

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Expected or Average return sum of ProbReturn Variance formula Sum of Probability Actual return Expectedreturn2 Standard deviation formula Variance Market See Answer

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Transcribed Image Text

The Lubin’s Investment Team is considering investing in twosecurities, A and B, and the relevant information is givenbelow:State of the economyProbabilityReturn on A(%)Return on B(%)Trough0.05-20%2%Recession0.4-5%2%Expansion0.515%2%Peak0.0520%2%Calculate the expected return andstandard deviation of two securities.

State of the economy	Probability	Return on A(%)	Return on B(%)
Trough	0.05	-20%	2%
Recession	0.4	-5%	2%
Expansion	0.5	15%	2%
Peak	0.05	20%	2%