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1. Two investments have the following returns for the two events indicated: event Pobability value of investment D F e 1 0.6 $600 -$100 e
1. Two investments have the following returns for the two events indicated:
event | Pobability | value of | investment |
D | F | ||
e 1 | 0.6 | $600 | -$100 |
e 2 | 0.4 | -$400 | $500 |
a. Compute the expectation and variance of the return of each investment and their co-variance od the two investments.
b. Compute the correlation coefficient of the returns of the two investments.
c. What is the expected value and variance of the total return of the investment in both Dand F?
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