There are three securities in the market. The following chart shows their possible payoffs:

Probability of Outcome: 0.14, 0.36, 0.36, 014

Return on Security 1: 0.196, 0,146, 0.096, 0.046

Return on Security 2: 0.196, 0.096, 0.146, 0.046

Return on Secuirty 3: 0.046, 0.096, 0.146, 0.196

Questions:

a-1:What is the expected return on each security? (Do not round intermediate calculations and enter your answers as percent rounded 2 decimal places.)

a-2:What is the standard deviation of each security? (Do not round intermediate calculations and enter your answers as percent rounded 2 decimal places.)

b-1:What are the covariances between the pairs of securities? (A negative answer should be indicated by a minus sign. DO not round intermediate calculations and round your answer to 5 decimal places.)

Security 1 & 2

Security 1 & 3

Security 2 & 3

b-2:What are the correlations between the pairs of securities? ( A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 4 decimal places.

Security 1 & 2

Security 1 & 3

Security 2 & 3

c-1:What is the expected return of a portfolio with half of its funds invested in Security 1 and half in Security 2? ( Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places.)

c-2:What is the standard deviation of a portfolio with half of its funds invested in Security 1 and half in Security 2? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places.)

d-1:What is the expected return of a portfolio with half it its funds invested in Security 1 and half in Security 3? ( Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places.)

d-2:What is the standard deviation of a portfolio with half of its funds invested in Security 1 and half in Security 3? (Leave no cells blank- be certain to enter 0 wherever required?

e-1:What is the expected return of a portfolio with half of its funds invested in Security 2 and half in Security 3? ( Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places.)

e-2:What is the standard deviation of a portfolio with half of its funds invested in Security 2 and half in Security 3? ( Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places.)