Question
1. Stock A and B are positively correlated with a coefficient of 0.73. The standard deviation of return for A and B are 8.9% and
1. Stock A and B are positively correlated with a coefficient of 0.73. The standard deviation of return for A and B are 8.9% and 5.12%, respectively. Find the Covariance of returns between A and B.
2. The excess return of stock KYM over the risk-free rate is 3.2%, while the excess return of the S&P 500 Index over the risk-free rate is 5.0%. Find the beta of stock KYM.
3. The correlation coefficient between stock WKS and S&P 500 Index is 0.86. The standard deviation of WKS and S&P 500 are 10.2% and 6.0%, respectively. Find the beta of WKS.
4. What is the expected return of YYK with a beta of -0.6 if the Treasury yield is 3%, the expected return of S&P 500 is 7% and the credit risk premium of YYK is 0.5%.
PLEASE SHOW ALL WORK!!!! I AM TRYING TO LEARN HOW TO DO THIS, SO INCLUDE FORMULAS AND STEPS.
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