Expected rates of return of stocks, Finance Basics

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Expected rates of return of stocks

Consider the following probability distribution for stocks A and B:

State Probability Return on Stock A Return on Stock B

1 30% 10% 11%

2 40% 15% 12%

3 30% 18% 15%

1) What are the expected rates of return of stocks A and B respectively?

2) What are the standard deviations of stocks A and B respectively?

3) If you invest 50% of your money in A and 50% in B, what would be your portfolio's expected rate of return and standard deviation (assume the coefficient of correlation between A and B = 0.895)?

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Finance Basics: Expected rates of return of stocks

Reference No:- TGS047292

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Recent Questions Asked Finance Basics

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Finance Basics: Expected rates of return of stocks

Reference No:- TGS047292

Recent Questions Asked Finance Basics

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Q : Calculate the present value of the following cash flows

Q : Deviate from the underlying economic reality

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