Consider the following information on the expected return for companies X and Y. a. Calculate the expected

Question:

Consider the following information on the expected return for companies X and Y.

Y (in %) X (in %) Probability Economy Boom 0.20 30 10 Neutral 0.50 10 20 Poor -30 0.30 LO

a. Calculate the expected value and the standard deviation of returns for companies X and Y.

b. Calculate the correlation coefficient if the covariance between X and Y is 88.

Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...

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