Find the expected rate of return on each stock

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Reference no: EM131983008

Security analysts at Smith Blarney have assigned the following probability distributions to the rates of return on Phoenix and LV stocks one year from now as follows

                              Return(%)                           Probability

States                Phoenix                                         LV

Worst                       -20                                      -10                          0.2

Bad                            0                                           0                         0.3

Normal                       20                                         10                         0.3

Good                         40                                         20                         0.2

a. Find the expected rate of return on each stock.

b. Find the standard deviation of each stock

c. Find covariance and correlation coefficient of the two stocks.

Reference no: EM131983008

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