Question

2. You want to develop a strategy for investment. You can invest in two different stocks, stock A or stock B. Stock A has an expected rate of return of 71 and standard deviation of 61.88. In addition, the following information is known regarding the economic conditions of the market and the rate of rate of returns: | Economic condition | Probability | Rate of rate of return Stock A | Rate of rate of return Stock B | | :--- | :--- | :--- | :--- | | Recession | 0.1 | -50 | 150 | | Slow growth | 0.3 | 20 | 100 | | Moderate growth | 0.4 | 100 | 100 | | Fast growth | 0.2 | 150 | -50 | a. Would you invest in stock A, or stock B? Why? b. If you are able to divide your money and put in a portfolio of 30% in stock A and 70% in stock B. Would you invest in stock A, or stock B or the portfolio? Why?

          2. You want to develop a strategy for investment. You can invest in two different stocks, stock A or stock B. Stock A has an expected rate of return of 71 and standard deviation of 61.88. In addition, the following information is known regarding the economic conditions of the market and the rate of rate of returns:

| Economic condition | Probability | Rate of rate of return Stock A | Rate of rate of return Stock B |
| :--- | :--- | :--- | :--- |
| Recession | 0.1 | -50 | 150 |
| Slow growth | 0.3 | 20 | 100 |
| Moderate growth | 0.4 | 100 | 100 |
| Fast growth | 0.2 | 150 | -50 |

a. Would you invest in stock A, or stock B? Why?
b. If you are able to divide your money and put in a portfolio of 30% in stock A and 70% in stock B. Would you invest in stock A, or stock B or the portfolio? Why?

2. You want to develop a strategy for investment. You can invest in two different stocks, stock A or stock B. Stock A has an expected rate of return of 71 and standard deviation of 61.88. In addition, the following information is known regarding the economic conditions of the market and the rate of rate of returns:

| Economic condition | Probability | Rate of rate of return Stock A | Rate of rate of return Stock B |
| :— | :— | :— | :— |
| Recession | 0.1 | -50 | 150 |
| Slow growth | 0.3 | 20 | 100 |
| Moderate growth | 0.4 | 100 | 100 |
| Fast growth | 0.2 | 150 | -50 |

a. Would you invest in stock A, or stock B? Why?
b. If you are able to divide your money and put in a portfolio of 30% in stock A and 70% in stock B. Would you invest in stock A, or stock B or the portfolio? Why?

Added by Danielle G.

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