Consider the Following Probability Distribution for Stocks a and B

question 22

Multiple Choice

Consider the following probability distribution for stocks A and B: $$\begin{array} { c c c c } \text { State } & \text { Probability } & \text { Return on Stock A } & \text { Return on Stock B } \\1 & 0.15 & 8 \% & 8 \% \\2 & 0.20 & 13 \% & 7 \% \\3 & 0.15 & 12 \% & 6 \% \\4 & 0.30 & 14 \% & 9 \% \\5 & 0.20 & 16 \% & 11 \% \\\hline\end{array}$$ The standard deviations of stocks A and B are _____ and _____, respectively.

• A) 1.56%; 1.99%
• B) 2.45%; 1.66%
• C) 3.22%; 2.01%
• D) 1.54%; 1.11%

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Definitions:

Longitudinal Study

A research design that involves repeated observations of the same variables (e.g., people) over short or long periods of time, often many years.

Correlational Study

A research method that examines the extent to which two variables are related, without inferring a cause-and-effect relationship between them.

Random Assignment

A method used in experiments to place participants into different groups in a way that each participant has an equal chance of being in any group, minimizing biases.

Participants

Individuals who take part in a study or experiment and whose behavior or responses are observed or measured.