### Finding expected mean, variances and standard deviation

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Consider the following ex ante (expected) distributions for assets 1 and 2: marginal distributions

 Asset 1 Asset 2 m R1m f(R1m) l R2l f(R2l) 1 12% 0.45 1 4% 0.09 2 6% 0.55 2 8% 0.17 3 10% 0.35 4 14% 0.39

joint distribution (for above outcomes of return)

 m L f(R1m, R2l) 1 1 0.01 1 2 0.03 1 3 0.17 1 4 0.24 2 1 0.08 2 2 0.14 2 3 0.18 2 4 0.15

Question

Using the ex ante data given on the preceding page, calculate the following:

A. The expected (mean) returns (E[Ri]) for assets 1 and 2

B. The variances (total risk) of return (si2) for assets 1 and 2

C. The standard deviations (total risk) of return (si) for assets 1 and 2

D. The covariance of return (sij) between assets 1 and 2

E. The correlation coefficient of return (rij) between assets 1 and 2

Additional Information

This kinds of question lies from Statistics and it is about finding expected mean, variances, standard deviation and correlation coefficient between two assets and their returns.

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