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Please solve in excel showing all the formulas Please write legibly. For each of the problems, show all your work and clearly explain how you
Please solve in excel showing all the formulas
Please write legibly. For each of the problems, show all your work and clearly explain how you solve the problem. You should follow these rules to get credit for your work. Problem 1: Miss Maple is considering two securities, A and B, with the relevant information given below, State of the economy Probability Return on Security A (%) Return on Security B (%) Bear 0.4 3.00% 6.50% Bull 0.6 15.00% 6.50% a. Calculate the expected return and standard deviation of each of the two securities. b. Suppose Miss Maple invested $2,500 in security A and $3,500 in security B. Calculate the ex- pected return and standard deviation of the portfolio. Problem 2: Returns on the stock of First Boston and Midas Metals for the years 2010-2013 are shown below. Year First Boston Midas Metals 2010 -18.00% 26.00% 2011 32.00% -5.00% 2012 18.00% 3.00% 2013 1.00% 10.00% a. Compute the average annual return for each stock and a portfolio consisting of 50% First Bos- ton and 50% Midas. b. Compute the standard deviation for each stock and the portfolio. c. Are the stocks positively or negatively correlated and what is the effect on riskStep by Step Solution
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