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* CANT POST SEPARATELY BCS QUESTIONS ARE USING SAME TABLE. TQ Question 2: Consider the following probability distribution for stocks A and B: State Probability

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* CANT POST SEPARATELY BCS QUESTIONS ARE USING SAME TABLE. TQ

Question 2: Consider the following probability distribution for stocks A and B: State Probability Return on Stock A Return on Stock B 1 0.15 8 8 2 0.20 13 7 3 0.15 12 6% 4 0.30 14 9 5 0.20 16% 11% and a. The expected rates of return of stocks A and B are respectively. (2 Marks) b. The standard deviations of stocks A and B are and respectively. (2 Marks) c. What is the coefficient of correlation between A and B ? (2 Marks) d. If you invest 35% of your money in A and 65% in B, what would be your portfolio's expected rate of return and standard deviation? (4 Marks) Question 2: Consider the following probability distribution for stocks A and B: State Probability Return on Stock A Return on Stock B 1 0.15 8 8 2 0.20 13 7 3 0.15 12 6% 4 0.30 14 9 5 0.20 16% 11% and a. The expected rates of return of stocks A and B are respectively. (2 Marks) b. The standard deviations of stocks A and B are and respectively. (2 Marks) c. What is the coefficient of correlation between A and B ? (2 Marks) d. If you invest 35% of your money in A and 65% in B, what would be your portfolio's expected rate of return and standard deviation? (4 Marks)

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