Find the expected rate of return on each stock find


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.

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Financial Management: Find the expected rate of return on each stock find
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