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Calculate the expected return and standard deviation

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Reference no: EM132796061

Given the following two stock portfolio, with 40% invested in Stock A and 60% 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

a. Calculate the expected return and standard deviation for Stock A and Stock B, respectively.

b. Calculate the Coefficient of Variation for Stock A and Stock B, respectively.

c. Calculate the Pearson correlation coefficient between Stock A and Stock B. What are the upper and lower bounds for the correlation coefficient?

d. Calculate the expected return of the portfolio.

e. Calculate the expected standard deviation of the portfolio.

Reference no: EM132796061

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