Question: Chapter 6: Risk and Project Appraisal or Chapter 7: Portfolio Theory or Chapter 8: CAPM and Multi-Factor Models. Please solve as soon as possible, I

Chapter 6: Risk and Project Appraisal or Chapter 7: Portfolio Theory or Chapter 8: CAPM and Multi-Factor Models. Please solve as soon as possible, I need this. In 10 or 20 minutes.

  1. The returns on shares of S and T vary depending on the state of the economic growth.

State of economy

Probability of Economic state occurring

Returns on S if economic state occurs (%)

Returns on T if economic state occurs (%)

Recession

0.20

-10

19

Growth

0.60

19

17

Boom

0.20

40

14

Required:

  1. Calculate the expected return and standard deviation for Share S and T.
  2. What are the covariance and the correlation coefficient between returns of S and T?

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