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Expected return and standard deviation for stock

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Reference no: EM133131813

Given the following two stock portfolio, with 70% invested in Stock A and 30% invested in Stock B:

State of Economy

Probability

Stock A (30%)

Stock B (70%)

Good

.25

25%

10%

Fair

.50

10%

5%

Poor

.25

-5%

0%

 

 

 

 

Expected return

 

 

 

Standard deviation

 

 

 

CV

 

 

 
  1. Calculate the expected return and standard deviation for Stock A and Stock B, respectively.
  2. Calculate the Coefficient of Variation for Stock A and Stock B, respectively.
  3. Calculate the Pearson correlation coefficient between Stock A and Stock B.  What are the upper and lower bounds for the correlation coefficient?
  4. Calculate the expected return of the portfolio.
  5. Calculate the expected standard deviation of the portfolio.

Reference no: EM133131813

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