You are given the following information: State of Economy Probability of State of Economy Return on Stock J Return on Stock K Bear .20 ?.030 .024 Normal .55 .128 .052 Bull .25 .208 .082 Calculate the...

70.2K

Verified Solution

Question

Finance

You are given the following information:

  State of
  Economy Probability of
State of Economy Return on
Stock J Return on
Stock K
  Bear .20 ?.030 .024
  Normal .55 .128 .052
  Bull .25 .208 .082

Calculate the expected return for each of the stocks.(Do not round intermediate calculations. Enter your answersas a percent rounded to 2 decimal places (e.g.,32.16).)

Expected return
  Stock J %
  Stock K %

Calculate the standard deviation for each of the stocks.(Do not round intermediate calculations. Enter your answersas a percent rounded to 2 decimal places (e.g.,32.16).)

Standard deviation
  Stock J %
  Stock K %

What is the covariance between the returns of the two stocks?(Do not round intermediate calculations and round youranswer to 6 decimal places (e.g.,32.161616).)

  Covariance

What is the correlation between the returns of the two stocks?(Do not round intermediate calculations and round youranswer to 4 decimal places (e.g.,32.1616).)

  Correlation

Answer & Explanation Solved by verified expert

4.0 Ratings (515 Votes)

See Answer

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

Transcribed Image Text

You are given the following information: State of EconomyProbability ofState of EconomyReturn onStock JReturn onStock K Bear.20?.030.024 Normal.55.128.052 Bull.25.208.082 Calculate the expected return for each of the stocks.(Do not round intermediate calculations. Enter your answersas a percent rounded to 2 decimal places (e.g.,32.16).) Expected return Stock J% Stock K% Calculate the standard deviation for each of the stocks.(Do not round intermediate calculations. Enter your answersas a percent rounded to 2 decimal places (e.g.,32.16).) Standard deviation Stock J% Stock K% What is the covariance between the returns of the two stocks?(Do not round intermediate calculations and round youranswer to 6 decimal places (e.g.,32.161616).) Covariance What is the correlation between the returns of the two stocks?(Do not round intermediate calculations and round youranswer to 4 decimal places (e.g.,32.1616).) Correlation

State of Economy	Probability of State of Economy	Return on Stock J	Return on Stock K
Bear	.20	?.030	.024
Normal	.55	.128	.052
Bull	.25	.208	.082