A stock will provide a rate of return of either −18% or 26%. If both possibilities are equally likely, calculate the stock's expected return and standard deviation. (Do not round intermediate calculations. Enter your answers as a whole percent.)

The expected return is 4% and the standard deviation is 22%.

Explanation:

Since both outcomes are equally likely, the expected value is the mean of both possible outcomes:

The standard deviation for this stock is:

The expected return is 4% and the standard deviation is 22%.

answer; lags, push the econ below the natural level of output;