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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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4.1 Ratings (670 Votes)
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.

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