Based on the following information, calculate the expected return and standard deviation for each of the following

Question:

Based on the following information, calculate the expected return and standard deviation for each of the following stocks. What are the covariance and correlation between the returns of the two stocks?

State of Probability of Return on Return on

Economy State of Economy Stock J Stock K

Bear.............................0.30........................−.020...........................0.034

Normal..........................0.55........................0.138...........................0.062

Bull..............................0.15.........................0.218...........................0.092

Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...