An Investor Is Analyzing the Risk Two Stocks a and B

question 62

Essay

An investor is analyzing the risk two stocks A and B within three expected states of the economy.If a boom economy occurs, stock A will provide an 8% return, while stock B will provide a 10% return; if an average economy transpires, stock A will provide a 5 return, while stock B will provide a 5% return; if a bust economy transpires, stock A will provide a -11% return and stock B will provide a -15% return.It is expected that there will be a 60% probability of an average return.Boom and Bust states have an equal chance of occurring.Determine which stock is riskier given the state information.

---

Definitions:

Goniometer

A protractor device that measures range of motion.

Spinal Curve

The natural curvature of the spine viewed from the side, which includes the cervical, thoracic, lumbar, and sacral curvatures.

Range of Motion

The full movement potential of a joint, usually its range of flexion and extension.

Dorsiflexion

Pointing the toes upward.