Standard deviation of returns of each stock

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Reference no: EM131848106

Consider the following information:

Scenario                      Probability      X return rate   Y return rate

Boom                          25%                 15%                 10%

Normal                       60%                 10%                 9%

Recession                 15%                 5%                   10%

• Calculate the expected return and standard deviation of returns of each stock.

• Then calculate the expected return and standard deviation of return for a portfolio with an investment of $6000 (60%) in stock X and $4000 (40%) in stock Y. To do so, you need to calculate the variance and standard deviation of each stock and the covariance of returns between stock X and stock Y.

Reference no: EM131848106

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