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What are the standard deviations of the returns on shares

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Question: You believe that there is a 50 per cent chance that the share price of Company L will decrease by 12 per cent and a 50 per cent chance that it will increase by 24 per cent. Further, you believe there is a 40 per cent chance that the share price of Company M will decrease by 12 per cent and a 60 per cent chance that it will increase by 24 per cent. The correlation coefficient of the returns on shares in the two companies is 0.75.

What are the standard deviations of the returns on the shares?

Reference no: EM132761605

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