Question: only question 3 please 1. Compute the expected return for a company that will be traded at $100, $120, and $140 next period with probabilities

only question 3 please

1. Compute the expected return for a company that will be traded at $100, $120, and $140 next period with probabilities 20%, 40%, and 40%, respectively. The price of that company today is $110.

2. Compute the correlation between assets A and B if you know that the standard deviation of B is 50% of the standard deviation of A and the covariance between the two assets is 0.5 times the variance of asset A.

3. What is the risk (measured as the variance) of the portfolio created by investing 50% in asset A and 50% in asset B in the previous point? Assume that the variance of the asset A is 4/9.

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