Question

	Bear	Normal	Bull
	Market	Market	Market
Probability	15.00%	50.00%	35.00%
Stock X	-12.00%	10.00%	21.00%
Stock Y	-22.00%	14.00%	39.00%

3.b) What are the standard deviations for of returns for stocks X and Y ?

Answer 1

hi please find below the solution ... please provide rating...

	Given that-
	i	ii	iii		iv=i*ii	v=i*iii		vi=i*(ii-10.55%%)^2	vii=i*(iii-17.35%)^2
	Probability	X	Y		Expected return X	Expected return Y		Variance A	Variance B
	15%	-12%	-22%		-1.80%	-3.30%		0.76%	2.32%
	50%	10%	14%		5.00%	7.00%		0.00%	0.06%
	35%	21%	39%		7.35%	13.65%		0.38%	1.64%
					10.55%	17.35%		1.15%	4.02%
	Expected return X				10.55%
	Expected return Y				17.35%
Answer b.	Expected SD of X = 1.15%^0.5				10.71%
	Expected SD of Y = 4.02%^0.5				20.05%