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

  1. 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 ECONOMY
PROBABILITY OF STATE OF ECONOMY
RETURN ON STOCK J
RETURN ON STOCK K
Bear
.15
-.130
.019
Normal
.60
.098
.118
Bull
.25
.343
.032

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