Question: Please fill table below Probability Expected return for Bond A Expected return for Bond B 0.05 12.0% 2.0% 0.30 10.0% 3.0% 0.35 9.0% -3.0% 0.20

Please fill table below
ProbabilityExpected return for Bond AExpected return for Bond B
0.0512.0%2.0%
0.3010.0%3.0%
0.359.0%-3.0%
0.206.0%2.0%
0.103.0%-4.0%
1Expected return for A
2Expected return for B
3Risk for A
4Risk for B
5Covariance between A and B
6Correlation coefficient between A and B
7Portfolio risk, at 50-50 weights

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To fill out the table we first need to calculate the expected returns for Bond A and Bond B which are given by the formula Expected return Probability of positive outcome x Return if positive outcome ... View full answer

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