Stocks A and B have the following returns: (Click on the following icon o in order to copy its contents into a spreadsheet.) Stock A Stock B 1 0.09 0.04 0.06 0.03 3. 0.12 0.06 4. - 0.04 0.02 5 0.09 -0.02 a. What are the expected returns of the two stocks? b. What are the standard deviations of the returns of the two stocks? c. If their correlation is 0.47, what is the expected return and standard deviation of a portfolio of 51% stock A and 49% stock B? What the expected returns of the two stocks?
Stocks A and B have the following returns: (Click on the following icon o in order to copy its contents into a spreadsheet.) Stock A Stock B 1 0.09 0.04 0.06 0.03 3. 0.12 0.06 4. - 0.04 0.02 5 0.09 -0.02 a. What are the expected returns of the two stocks? b. What are the standard deviations of the returns of the two stocks? c. If their correlation is 0.47, what is the expected return and standard deviation of a portfolio of 51% stock A and 49% stock B? What the expected returns of the two stocks?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Stocks A and B have the following returns: (Click on the following icon o in order to copy its contents into a spreadsheet.)
Stock A
Stock B
1
0.09
0.04
0.06
0.03
3.
0.12
0.06
4
- 0.04
0.02
5
0.09
-0.02
a. What are the expected returns of the two stocks?
b. What are the standard deviations of the returns of the two stocks?
c. If their correlation is 0.47, what is the expected return and standard deviation of a portfolio of 51% stock A and 49% stock B?
a. What are the expected returns of the two stocks?
The expected return for stock A is (Round to three decimal places.)
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