5. There are three different potential states of the economy next year. The chart below shows...

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5. There are three different potential states of the economy next year. The chart below shows you the returns for stocks O and U under each potential economic situation, along with the probability of each situation occurring (note that the probabilities are not all the same). These are the only two stocks in the economy. Economic State Probability 0 U Boom .2 14% 25% Average .4 4% 10% Bust .4 2% -10% O and U can be combined on a 50/50 basis to form Portfolio OU. Based on the information above, calculate the following: Please use the specified units. To help you, the standard deviation of O is 4.489989%. Please show your work. Please carry out your final answer at least 5 decimal places for C, D, and F. A. Expected Return of U (percent) B. Standard Deviation of U (percent) C. Covariance between O and U (decimal) D. Correlation Coefficient between O and U (decimal) E. Expected Return of Portfolio OU (percent) F. Standard Deviation of Portfolio OU (percent) 5. There are three different potential states of the economy next year. The chart below shows you the returns for stocks O and U under each potential economic situation, along with the probability of each situation occurring (note that the probabilities are not all the same). These are the only two stocks in the economy. Economic State Probability 0 U Boom .2 14% 25% Average .4 4% 10% Bust .4 2% -10% O and U can be combined on a 50/50 basis to form Portfolio OU. Based on the information above, calculate the following: Please use the specified units. To help you, the standard deviation of O is 4.489989%. Please show your work. Please carry out your final answer at least 5 decimal places for C, D, and F. A. Expected Return of U (percent) B. Standard Deviation of U (percent) C. Covariance between O and U (decimal) D. Correlation Coefficient between O and U (decimal) E. Expected Return of Portfolio OU (percent) F. Standard Deviation of Portfolio OU (percent)

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To calculate the requested values well use the formulas for expected return standard deviation covar... View the full answer