Question: Consider two risky assets with prices S1(0) = 100, S2(0) = 150 the price is: S1(1), S2(1) = (80, 250) with probability 2/8 (90, 150)

Consider two risky assets with prices S1(0) = 100, S2(0) = 150 the price is:

S1(1), S2(1) =

(80, 250) with probability 2/8

(90, 150) with probability 4/8

(120, 200) with probability 2/8

a.) Compute mean and standard deviations (1, 1) and (2, 2) for the two assets

b.) Compute the correlation coefficient between the two assets

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