PLEASE show all formulas! Thank you

Use the following information of rates of return for Stock A and Stock B to answer questions 6 and 7:

Probability of State

State of Economy of Economy Return on A Return on B

Recession .50 -0.10 0.20

Boom .50 0.30 - 0.10

1. What comes closest to Stock As expected return and Stock Bs standard deviation?

a.Stock As expected return is 10% and Stock Bs standard deviation is 15%

b.Stock As expected return is 10% and Stock Bs standard deviation is 2%

c.Stock As expected return is 10% and Stock Bs standard deviation is 0%

d.Stock As expected return is 15% and Stock Bs standard deviation is 15%

e.Stock As expected return is 15% and Stock Bs standard deviation is 0%

• What can be said about the covariance between Stock A and Stock B? (This question has only 3 possible answer choices no choice D and no choice E)

a.The covariance will be equal to zero or very close to zero

b.The covariance will be greater than zero

c. The covariance will be less than zero

• 3. A portfolio is comprised of equal weights of two stocks labeled X and Y. The covariance between Stock X and Stock Y is 0.10. The variance of Stock X is 0.25, and the variance of Stock Y is 0.25. Which of the following comes closest to the correlation coefficient between Stock X and Stock Y?
• a.0.00
• b.0.25
• c.0.40
• d.0.50
• e.0.75