Question
7. You are given the following information: State of Economy Return on Stock A Return on Stock B Bear .112 .055 Normal .105 .158 Bull
7.
You are given the following information: |
State of Economy | Return on Stock A | Return on Stock B |
Bear | .112 | .055 |
Normal | .105 | .158 |
Bull | .083 | .243 |
Assume each state of the economy is equally likely to happen. |
Calculate the expected return of each stock. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16).) |
Expected return | |
Stock A | % |
Stock B | % |
Calculate the standard deviation of each stock. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16).) |
Standard deviation | |
Stock A | % |
Stock B | % |
What is the covariance between the returns of the two stocks? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 6 decimal places (e.g., 32.161616).) |
Covariance |
What is the correlation between the returns of the two stocks? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 4 decimal places (e.g., 32.1616).) |
Correlation |
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