FINA6301 HWK Problems 13th Edition Chapters 10 - Session 8 7. Calculating Returns and Variability Using the following returns, calculate the arithmetic average returns, the variances, and the standard deviations for X and Y: AN Returns Year b 4 Y 1 13% 27% 2 26 36 g T " 4 -5 -29 5 11 16 In Problem 10-7 above, calculate the covariance and the correlation coefficient as well. Chapter 11 Session 6-1 5. Calculating Returns and Standard Deviations Based on the following information, calculate the expected return and standard deviation for Stock A and Stock B: TN Probability of Rate of Return if 0T State of State Occurs Economy Stock A Stock B Recession 15 .04 =6 T Normal .55 .09 A2 Boom .30 A7 27 In Problem 11-5 abowve, calculate the covariance and the correlation coefficient as well. 28, Portfolio Standard Deviation Suppose the expected returns and standard deviations of Stocks Aand B are E(Ra) = .10, E(Rg) = .12, 04 = .39, and o = .72. a. Calculate the expected return and standard deviation of a portfolio that is composed of 40 percent A and 60 percent B when the correlation between the returns on A and B is .5. b. Calculate the standard deviation of a portfolio with the same portiolio weights as in part (a) when the correlation coefficient between the retums on Aand B is -.5. c. How does the correlation between the returns on A and B affect the standard deviation of the portfolio