Solution-What are the covariance and correlation

What are the covariance and correlation

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Reference no: EM133111841

1. The stocks A and B have the following distributions of returns.

	A	B	Probability
State 1	3	4	0.2
State 2	5	2	0.3
State 3	4	8	0.2
State 4	6	5	0.1
State 5	6	1	0.2

2. What are the means, variances and standard deviationsof stocks A and B?

3. What are the covariance and correlation between stocks A and B?

4. Consider a portfoliowith p =0.50 in A and 1 - p = 0.5 in B. What are the mean, variance and standard deviation of this portfolio?

Reference no: EM133111841

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What are the covariance and correlation

Reference no: EM133111841

Reference no: EM133111841

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