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• Calculate the expected return and standard deviation of for single stocks and portfolio

1) Calculate the expected return and standard deviation of for single stocks and portfolio You have estimated the following probability distributions of expected future returns from stocks X and Y: a) b) c) d) What is the expected return for stock X and Y? What is the standard deviation of expected returns for stock X and Y? Calculate the expected return and standard deviation of the mix of 50% X and 50% Y. Which stock would you consider to be riskier, X, Y, or 50% X + 50% Y? Why? (hint: calculate the coefficient of variation = standard deviation / expected return and compare.) 2) Capital asset pricing model (CAPM) Give a risk-free rate (rf) of 6% and a market risk premium (rm - rf) of 8.2%, calculate the required rate of return on each the following case. Hint: CAPM model: r = rf + * (rm - rf) a. Amazon.com with = 1.05 b. DuPont with = 1.15 c. 30% Amazon + 70% of DuPont. Page 1 of 1