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The following are estimates for a probability distribution of expected future returns for Stocks X and Y : i. What is the expected rate of
The following are estimates for a probability distribution of expected future returns for Stocks X and Y : i. What is the expected rate of return for Stock X and Stock Y ? (4 marks) ii. What is the standard deviation of expected returns for Stock X and for stock Y ? (6 marks) iii. Which stock is riskier and why? (2 marks) You received $2,000,000 and decided to invest $1,200,000 in stock X and $800,000 in stock Y. If the correlation of returns between X and Y is 0.5, compute the following: i. The expected return from the portfolio. (3 marks) ii. The standard deviation of returns from the portfolio
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