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State Probability Return on Stock A Return on Stock B 1 4% 49% -41% 2 87% 35% 9% 3 4% 27% 32% 4 5% 42%
State | Probability | Return on Stock A | Return on Stock B |
1 | 4% | 49% | -41% |
2 | 87% | 35% | 9% |
3 | 4% | 27% | 32% |
4 | 5% | 42% | 19% |
(i) Find the Expected Return on Stock A [1 mark]
(ii) Find the Variance of the returns on Stock A [3 marks]
(iii) Find the Standard Deviation of the returns on Stock A. [1 mark]
(iv) Find the Expected Return on Stock B [1 mark]
(v) Find the Variance of the returns on Stock B [3 marks]
(vi) Find the Standard Deviation of the returns on Stock B [1 mark]
(vii) Find the Covariance between the returns on Stock A and Stock B [2 marks]
(viii) Find the Correlation Coefficient between the returns on Stock A and Stock [3 marks]
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