Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please answer all if possible 1) Consider the following probability distributions for stocks A and B: State Probability Return on A Return on B 1

Please answer all if possible

1) Consider the following probability distributions for stocks A and B:

State Probability Return on A Return on B
1 .3 7% -9%
2 .5 11% 14%
3 .2 -16% 26%

a) What is the correlation between stocks A and B? Please give your answer in decimal form rounded to the third decimal place.

b) What is the expected return on stock A? Please give your answer in percent rounded to the nearest basis point.

c) What is the expected return on stock B? Please give your answer in percent rounded to the nearest basis point.

d) If you invest 25% of your portfolio in stock A and the rest (75%) in stock B, what is your portfolio's standard deviation? Please give your answer in percent rounded to the nearest basis point.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Meetings Expositions Events And Conventions An Introduction To The Industry

Authors: George Fenich

5th Edition

0134735900, 9780134735900

More Books

Students also viewed these Finance questions

Question

Why should an individual manager be interested in supporting HR?

Answered: 1 week ago