Question
(Assume each state has a probability of 20%) Stocks A and B have the following returns: Stock A Stock B 1 .10 .06 2 .07
(Assume each state has a probability of 20%) Stocks A and B have the following returns:
|
| Stock A | Stock B |
| 1 | .10 | .06 |
| 2 | .07 | .02 |
| 3 | .15 | .05 |
| 4 | -.05 | .01 |
| 5 | .08 | -.02 |
a. What are the expected returns of the two stocks? b. What are the standard deviations of the returns of the two stocks? c. If their correlation is .46, what is the expected return and standard deviation of a portfolio of 70% Stock A and 30% Stock B?
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The Charles Schwab Guide To Finances After Fifty
Authors: Carrie Schwab-Pomerantz, Joanne Cuthbertson
1st Edition
0804137366, 978-0804137362
