Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. risk and return 1). suppose that you are consideri

Risk and Return 1). Suppose that you are considering investing in two stocks. After analyzing...

80.2K

Verified Solution

Question

Finance

image

Risk and Return 1). Suppose that you are considering investing in two stocks. After analyzing the two stocks you think that there are two possible states for the economy over the next year: "Good" and "Bad". Each state is equally likely (probability 0.5). The returns on the two securities in each state are as follows: State Good Bad Return Stock A 20% 10% Return Stock B 4% 8% a) What is the expected return and standard deviation of each stock? b) What is the covariance and correlation between the two stocks

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students