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You are given the following information about the possible returns offered by the two stocks, Stock X and Stock Y for the year 2019.
You are given the following information about the possible returns offered by the two stocks, Stock X and Stock Y for the year 2019. Scenario Probability Return from X Return from Y Economic recession 50% 50% -20% Economic boom 50% -25% 50% b) Calculate the expected returns for Stock X, Stock Y (4 marks) c) Calculate the standard deviation for each Stock (4 marks) d) From Risk-Return point of view, which stock X or Y is a better investment? Why? (4 marks) e) What is the correlation coefficient between returns on stock X and stock Y? (4 marks) f) Calculate the expected returns and standard deviations for a "portfolio" consisting of 40% of stock X and 60% of stock Y. (4 marks)
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