Compute the expected return and standard deviation

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Problem: Consider two stocks, A, B. Over the investment horizon, only three equally likely scenarios are possible. The returns on stock A in scenarios one, two and three are, respectively, RA1 = 3%, RA2 = 24% and RA3 = 3%. The corresponding returns for stock B are RB1 = -4%, RB2 = 20% and RB3 = 20%.

Question: Compute the expected return and standard deviation of stocks A and B , as well as, the correlation coe?cient between A and B.

Reference no: EM132432758

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