1.Expected Return, Variance and Risk

You believe that there is a 50% chance that the share price of Company L will decrease by 12% and a 50% chance that it will increase by 24%. Further, there is a 40% chance that the share price of Company M will decrease by 12% and a 60% chance that it will increase by 24%. The correlation coefficient of the returns on shares in the two companies is 0.75. Calculate;

A)The expected return, variance and standard deviation for each company's shares

B)The covariance between their returns.