Consider the following information:    Rate of Return if State OccursState of Economy Probability of State of Economy Stock A Stock BRecession   0.15     0.07   − 0.24  Normal   0.55     0.16     0.21  Boom   0.30     0.27     0.26    Calculate the expected return for each stock. (Do not round intermediate calculations. Round the final answers to 2 decimal places.)    Expected returnStock A %Stock B %  Calculate the standard deviation for each stock. (Do not round intermediate calculations. Round the final answers to 2 decimal places.)    Standard deviationStock A %Stock B %

To calculate the expected return for each stock, we need to multiply the rate of return of each state by the probability of that state, and then sum up these products.

For Stock A: Expected return = (0.15 * 0.07) + (0.55 * 0.16) + (0.30 * 0.27) = 0.0105 + 0.088 + 0.081 = 0.1795 or 17.95%

For Stock B: Expected return = (0.15 * -0.24) + (0.55 * 0.21) + (0.30 * 0.26) = -0.036 + 0.1155 + 0.078 = 0.1575 or 15.75%

To calculate the standard deviation for each stock, we first need to calculate the variance, which is the weighted average of the squared deviations from the expected return. Then, the standard deviation is the square root of the variance.

For Stock A: Variance = 0.15 * (0.07 - 0.1795)^2 + 0.55 * (0.16 - 0.1795)^2 + 0.30 * (0.27 - 0.1795)^2 Standard deviation = sqrt(Variance)

For Stock B: Variance = 0.15 * (-0.24 - 0.1575)^2 + 0.55 * (0.21 - 0.1575)^2 + 0.30 * (0.26 - 0.1575)^2 Standard deviation = sqrt(Variance)

Please note that the standard deviation calculation requires a calculator or software that can handle square roots and squares.

To calculate the expected return for each stock, we need to multiply the rate of return of each state by the probability of that state, and then sum up these products.

For Stock A: Expected return = (0.15 * 0.07) + (0.55 * 0.16) + (0.30 * 0.27) = 0.0105 + 0.088 + 0.081 = 0.1795 or 17.95%

For Stock B: Expected return = (0.15 * -0.24) + (0.55 * 0.21) + (0.30 * 0.26) = -0.036 + 0.1155 + 0.078 = 0.1575 or 15.75%

To calculate the standard deviation for each stock, we first need to calculate the variance, which is the sum of the squared differences between each state's return and the expected return, weighted by the probability of each state. Then, the standard deviation is the square root of the variance.

For Stock A: Variance = 0.15 * (0.07 - 0.1795)^2 + 0.55 * (0.16 - 0.1795)^2 + 0.30 * (0.27 - 0.1795)^2 = 0.0016 Standard deviation = sqrt(0.0016) = 0.04 or 4%

For Stock B: Variance = 0.15 * (-0.24 - 0.1575)^2 + 0.55 * (0.21 - 0.1575)^2 + 0.30 * (0.26 - 0.1575)^2 = 0.0196 Standard deviation = sqrt(0.0196) = 0.14 or 14%