Given the following distribution of rates of return on two risky assets, A and M:

Probability RA RM
0.30, 20%, 15%
0.40, 8, 6
0.30, - 10, - 4

1. Calculate the expected returns on assets A and M.
2. Calculate the variances of assets, A and M.
3. Calculate the covariance of assets A and M.
4. Calculate the correlation coefficient of assets A and M.
5. Now assume that asset M is actually the market portfolio, and calculate the beta of asset A.

Answer rating: 100% (QA)

To calculate the expected returns variances covariance correlation coefficient and beta we can use t... View the full answer