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Ms. Maple is considering two securities, A and B, and the relevant information is given below: State of the economy Probability Return on A(%) Return
Ms. Maple is considering two securities, A and B, and the relevant information is given below:
State of the economy | Probability | Return on A(%) | Return on B(%) |
Bear | 0.4 | 3 | 6.5 |
Bull | 0.6 | 15 | 6.5 |
Part A: Calculate expected return and standard deviation of two securities.
Part B: Suppose Miss Maple invested $2,500 in security A and $3,500 in security B. Calculate the expected return and standard deviation of her portfolio.
PLEASE SHOW FORMULAS AND CALCULATIONS . THANK YOU.
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