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Stocks A and B have the following returns: 1 2 3 Stock A 0.10 0.07 0.15 -0.05 0.08 Stock B 0.06 0.02 0.05 0.01 -0.02

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Stocks A and B have the following returns: 1 2 3 Stock A 0.10 0.07 0.15 -0.05 0.08 Stock B 0.06 0.02 0.05 0.01 -0.02 4 5 a. What are the expected returns of the two stocks? b. What are the standard deviations of the returns of the two stocks? c. If their correlation is 0.46, what is the expected return and standard deviation of a portfolio of 70% stock A and 30% stock B? a. What are the expected returns of the two stocks? The expected return for stock A is (Round to three decimal places.) The last four years of returns for a stock are as shown here: a. What is the average annual return? b. What is the variance of the stock's returns? c. What is the standard deviation of the stock's returns? Note: Notice that the average return and standard deviation must be entered in percentage format. The variance must be entered in decimal format. a. What is the average annual return? The average return is 10.10 %. (Round to two decimal places.) b. What is the variance of the stock's returns? The variance of the returns is (Round to five decimal places.)

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