An Analyst Predicts Three Economic States of a Boom, Average

question 46

Essay

An analyst predicts three economic states of a Boom, Average and Bust economic states, with probabilities of 40%, 50% and 10% respectively.If a boom economic state occurs, stock A will provide a 10% return and stock B will provide a 2% return; if an average economy occurs, stock A will provide a 6% return and stock B will provide a 5% return.During a bust economy, stock A will provide a -5% return and stock B a 12% return.Given this information, determine which stock is riskier.

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Definitions:

Receptive Vocabulary

The collection of words a person understands when heard or read, as opposed to those they actively use.

Babbling

An early stage in language development where infants produce sounds and syllables that do not have meaning, often a precursor to the development of actual spoken words.

Consonant-Vowel

Refers to the combination of consonants and vowels in the formation of syllables and words, crucial in language learning and development.

Cooing

The earliest form of vocalization in infants, characterized by soft, gurgling noises made to express pleasure or contentment, often developing within the first few months of life.