To assume that the correlation between S&P 500 and other country indexes is cut in half and to find the new standard deviations corresponding to each of the three expected returns to test if they are higher or lower. Introduction: To calculate the correlation and the country indexes including the standard deviations, the tests of regression, ANOVA and so on has to be taken. Here let us suppose, we have invested in two stocks A and B in the state of economies Bear, Normal and Bull. The return on Stock A in percentage is 7.3, 11.5 and 16.6 while on stock B; it is -4.7, 5.4 and 24.3 in the respective state of economies.

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Chapter 19.2, Problem 2EQ

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To assume that the correlation between S&P 500 and other country indexes is cut in half and to find the new standard deviations corresponding to each of the three expected returns to test if they are higher or lower.

Introduction:

To calculate the correlation and the country indexes including the standard deviations, the tests of regression, ANOVA and so on has to be taken. Here let us suppose, we have invested in two stocks A and B in the state of economies Bear, Normal and Bull. The return on Stock A in percentage is 7.3, 11.5 and 16.6 while on stock B; it is -4.7, 5.4 and 24.3 in the respective state of economies.

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