Question: How to do question D,E,F,G answer? Problem 4 (23 marks Consider the following probability distribution for stocks A and B: State Probability 0.10 0.20 0.20

How to do question D,E,F,G answer?

Problem 4 (23 marks Consider the following probability distribution for stocks A and B: State Probability 0.10 0.20 0.20 0.30 Return on StockA 10% 13% 12% 14% 15% Return on Stock B 8% 7% 5% 9% 8% Sorrelationwitmarketportfoliohasastandar deviati not? %, ne Stock A has a correlation with the market portfolio of 0.75 and stock B has a correlation with the market portfolio of 0.3. The market portfolio has a standard deviation of equal to 2.5%. a) Calculate the expected return.of stock A and Stock B b) Calculate the standard deviation of stock A and stock B. c) Calculate the coefficient of correlation between Stock A and Stock B ER a 127 If you invest 40% of your money in A and 60% in B, what would be the expected rate of return and standard deviation your portfolio? d) ER 2

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