Hello,

I am looking for solution to the below questions, please get back and let me know the solution soon. I do have an excel which might be helpful for this, so let me know how to share it. I have also attached the question in image form.

4. Assume that over the next year you believe there are only 2 possible states of the world, each with probability 50%. The table below gives the returns on the US and Brazilian equity markets in these two scenarios.

Prob. 50% -50%

US return -10% and 20%

Braz. return -15% and 35%

a. What are the expected returns on the US and Brazil (in percent)?

b. What are the volatilities (standard deviations) of the returns on the US and Brazil (in percent)?

c. What is the covariance between the returns on the US and Brazil?

d. What is the correlation between the returns on the US and Brazil?