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The table below reports the annual returns to stocks x and Y in three different scenarios. You will verify your calculations in question 2 ,
The table below reports the annual returns to stocks and in three different scenarios. You will verify your calculations in question so don't use a spreadsheet for this question yet.
tableScenarioProbability,Stock X returns in Stock Y returns in BoomNormalBust
a What are the expected returns for stocks and respectively? Show your calculations.
b What are the standard deviations for stocks and respectively? Show your calculations.
c Calculate the Sharpe ratio for each stock.
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