You are given the following information: State of Economy Return on Stock A Return on Stock B Bear .119 ?.062 Normal .098 .165 Bull .090 .250 Assume each state of the...

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Finance

You are given the following information:

  State of
Economy Return on
Stock A Return on
Stock B
  Bear .119 ?.062
  Normal .098 .165
  Bull .090 .250

Assume each state of the economy is equally likely tohappen.

Calculate the expected return of each of the following stocks.(Do not round intermediate calculations and enter youranswers as a percent rounded to 2 decimal places, e.g.,32.16.)

Expected return
  Stock A %
  Stock B %

Calculate the standard deviation of each of the followingstocks. (Do not round intermediate calculations and enteryour answers as a percent rounded to 2 decimal places, e.g.,32.16.)

Standard deviation
  Stock A %
  Stock B %

What is the covariance between the returns of the two stocks?(A negative answer should be indicated by a minus sign. Donot round intermediate calculations and round your answerto 6 decimal places, e.g.,32.161616.)

Covariance

What is the correlation between the returns of the two stocks?(A negative answer should be indicated by a minus sign. Donot round intermediate calculations and round your answerto 4 decimal places, e.g.,32.1616.)

  Correlation

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Transcribed Image Text

You are given the following information: State ofEconomyReturn onStock AReturn onStock B Bear.119?.062 Normal.098.165 Bull.090.250 Assume each state of the economy is equally likely tohappen. Calculate the expected return of each of the following stocks.(Do not round intermediate calculations and enter youranswers as a percent rounded to 2 decimal places, e.g.,32.16.) Expected return Stock A% Stock B% Calculate the standard deviation of each of the followingstocks. (Do not round intermediate calculations and enteryour answers as a percent rounded to 2 decimal places, e.g.,32.16.) Standard deviation Stock A% Stock B% What is the covariance between the returns of the two stocks?(A negative answer should be indicated by a minus sign. Donot round intermediate calculations and round your answerto 6 decimal places, e.g.,32.161616.) Covariance What is the correlation between the returns of the two stocks?(A negative answer should be indicated by a minus sign. Donot round intermediate calculations and round your answerto 4 decimal places, e.g.,32.1616.) Correlation

State of Economy	Return on Stock A	Return on Stock B
Bear	.119	?.062
Normal	.098	.165
Bull	.090	.250