senor juan antonio calzada de la madrid is considering two stocks, a and b for investment purposes. below are possible rates of return on the two stocks

Stock A. Stock B

7%. 13%

11%. 5%

Required

1. Calculate the expected return and standard deviation for each stock assuming equal probabilty of occurence

2. Calculate the covariance and correlation between the two stocks

3. Assume that senor madrid forms a portofolio in which he invest 66.67 of his wealth in stock a and the remaining 33.33 percent in stock b, what are the expected return and standard deviation of his portofolio?

4. discuss your results