Question: Consider the following probability distribution for stocks A and B: The expected rates of return of stocks A and B are _____ and _____, respectively.

Consider the following probability distribution for stocks A and B:

Consider the following probability distribution for stocks A and B: The expected

  1. The expected rates of return of stocks A and B are _____ and _____, respectively.
  2. The standard deviations of stocks A and B are _____ and _____, respectively.
  3. What is the coefficient of correlation between A and B ?

If you invest 35% of your money in A and 65% in B, what would be your portfolio's expected rate of return and standard deviation?

State Probability Return on Stock A Return on Stock B 1 0.15 8 8% 2 0.20 13% 79% 3 0.15 12% 6% 4 0.30 14% 5 0.20 16% 11% 9

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