Question: Please answer use formulas and step by step Year Probability Stock returns Stock returns BCDE FGHI 1 0,25 0,18 0,28 2 0,20 0,15 0,24 3
Please answer use formulas and step by step
| Year | Probability | Stock returns | Stock returns |
| BCDE | FGHI | ||
| 1 | 0,25 | 0,18 | 0,28 |
| 2 | 0,20 | 0,15 | 0,24 |
| 3 | 0,35 | 0,18 | 0,20 |
| 4 | 0,20 | 0,24 | 0,18 |
From the data above, James owns 2 stocks and has the same probability return distribution
Calculate: 1). Expected Return E(R) , BCDE Shares and FGHI Shares 2). Variance and Standard Deviation of BCDE Stock and FGHI Stock, respectively 3).Calculate Covariance between BCDE and FGHI Shares (Cov bcde,fghi) 4). If the two stocks will form a portfolio with a weight/portion of 50% each. Calculate the Expected Return and Standard Deviation of the portfolio!
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