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