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Consider the following probability distribution for stocks X and Y: State 1 2 3 Probability .25 .5 .25 Return on stock X 13% 10% -6%

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Consider the following probability distribution for stocks X and Y: State 1 2 3 Probability .25 .5 .25 Return on stock X 13% 10% -6% Return on stock Y 14% 10% -8% The correlation coefficient between the two stocks is 0.20. Write your answers to two decimal places. 1) What are the expected rates of return of stocks X and Y? 2) What is the risk for stocks X and Y? Manual solution with laws

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