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Peter considers investing $100,000 in Stock A and Stock B. After gathering information, he estimated that the return of both stocks varies with economic conditions.

image text in transcribed Peter considers investing $100,000 in Stock A and Stock B. After gathering information, he estimated that the return of both stocks varies with economic conditions. The return of Stock A and Stock B depends on the following economic scenario. 2.1 Compute the expected return of both stocks. 2.2 Compute the standard deviation of both stocks. 2.3 Compute the covariance and correlation between the rates of return of these two stocks. 2.4 Compute the expected return and standard deviation of the portfolio investing $30,000 in Stock A and $70,000 in Stock B Peter considers investing $100,000 in Stock A and Stock B. After gathering information, he estimated that the return of both stocks varies with economic conditions. The return of Stock A and Stock B depends on the following economic scenario. 2.1 Compute the expected return of both stocks. 2.2 Compute the standard deviation of both stocks. 2.3 Compute the covariance and correlation between the rates of return of these two stocks. 2.4 Compute the expected return and standard deviation of the portfolio investing $30,000 in Stock A and $70,000 in Stock B

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