State of Nature………..Probability…………….State Dependent ReturnA………….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 standarddeviation 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?
