Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Stocks A and B have the following returns: Stock A Stock B 1 0.08 0.05 2 0.05 0.02 3 0.14 0.05 4 0.02 0.01 5

Stocks A and B have the following returns:

Stock A Stock B
1 0.08 0.05
2 0.05 0.02
3 0.14 0.05
4 0.02 0.01
5 0.07 0.02

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 0.45, what is the expected return and standard deviation of a portfolio of 52% stock A and 48% stock B?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Regulation In The EU From Resilience To Growth

Authors: Raphaël Douady , Clément Goulet, Pierre-Charles Pradier

1st Edition

3319442864,3319442872

More Books

Students also viewed these Finance questions