You work for a large investment management firm. The analysts with your firm have made the following forecasts for the retums of stock A and stock B: Probability Stock A Stock B EXTREMELY WEAK 2% 65% -80% VERY VERY WEAK 7% 55% -65% VERY WEAK 11% 30% -50% WEAK 14% 20% -25% SOMEWHAT WEAK 16% 18% 15% Somewhat strong 18% 10% 25% STRONG 14% -10% 50% VERY STRONG 10% -17% 75% VERY VERY STRONG 6% -45% 80% EXTREMELY STRONG 2% -55% 95% 100.0% a) Calculate the expected returns, variance and the standard deviations for stock A and B. b) What is the covariance of returns for Stock A and Stock B? What is the correlation coefficient for Stock A and Stock B? c) What is the expected return and standard deviation of a portfolio where 30% of the portfolio is in stock A and 70% of the portfolio is in stock B? d) Create a table that has the expected return and standard deviation for different weights in each stock. This can be done using an excel data table. Start with 100% in A and zero in B, and increments of 10%, complete the table. The last row, will have 0% in A and 100% in B. Then chart (or graph) your results. weight in B weight in A Portfolio standard deviation Link to the answer for 20% and 80%, let the weight in A change... portfolio expected return Link to the answer for 20% and 80%, let the weight in A change... 0% 100% 10% 90% 20% 80% 30% 70% 40% 60% 50% 50% 60% 40% 70% 30% 80% 20% 90% 10% 100% 0% Note: All calculations should be rounded to one decimal place if you are using percentages, if you are using decimals then the answer should be rounded to three decimal places.