Expected return and standard deviation of gryphon

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An investor is considering the purchase of Gryphon stock, which has returns given in the table below.

Scenario Probability Rate of Return

Recession 0.22 -3%

Normal Econom. 0.57 9%

Boom 0.21 12%

Calculate the expected return and standard deviation of Gryphon. Round your answers to 2 decimal places.

E(r)= 6.99

Standard dev= 5.43

Here is the next part of question.

The investor decides to diversify by investing $5,000 in Gryphon stock and $10,000 in Royal stock, which has an expected return of 8% and a standard deviation of 9.4%. The correlation coefficient for the two stocks' returns is 0.4. Calculate the expected return and standard deviation of the portfolio. Round your answers to 2 decimal places.

Enter your answers below.

E(rp)=

Reference no: EM132666669

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