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16.The returns on shares of company A and B vary depending on the state of economic growth. Probability Return on A Return on B State
16.The returns on shares of company A and B vary depending on the state of economic growth. Probability Return on A Return on B State of the economy P RA (%) R. (%) Boom 0.3 20 3 Growth 0.4 10 35 Recession 0.3 0 -5 a). Calculate expected return and standard deviation of company A shares. (2 marks) b). Calculate expected return and standard deviation of company B shares. (2 marks) c). What are the covariance and the correlation coefficient between returns on A and returns on B? (1 mark)
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