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You are given the following information: State of Economy Return on Stock A Return on Stock B Bear .109 .052 Normal .108 .155 Bull .080
You are given the following information: |
State of Economy | Return on Stock A | Return on Stock B |
Bear | .109 | .052 |
Normal | .108 | .155 |
Bull | .080 | .240 |
Assume each state of the economy is equally likely to happen. |
a. | Calculate the expected return of each stock. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
b. | Calculate the standard deviation of each stock. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
c. | What is the covariance between the returns of the two stocks? (A negative answer should be indicated by a minus sign, Do not round intermediate calculations and round your answer to 6 decimal places, e.g., .161616.) |
d. | What is the correlation between the returns of the two stocks? (A negative answer should be indicated by a minus sign, Do not round intermediate calculations and round your answer to 4 decimal places, e.g., .1616.) |
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