Question
1. Two stocks have the following possible outcomes: Outcome Probability Stock W Market Stock X...
1. Two stocks have the following possible outcomes:
|
Outcome |
Probability |
Stock W |
Market |
Stock X |
|
1 |
.15 |
+2% |
+7% |
+25% |
|
2 |
.15 |
+18% |
+4% |
+10% |
|
3 |
.40 |
+9% |
+8% |
+14% |
|
4 |
.15 |
-12% |
-9% |
+3% |
|
5 |
.15 |
+8% |
-2% |
-10% |
a. What is the expected return for each stock and the Market?
b. What is the standard deviation for each stock and the Market?
c. What is the correlation between the stocks, and each stock and the Market?
d. If you hold a portfolio of the stocks that is weighted 60% W, and 40% X, what is the expected return and standard deviation for the portfolio?
e. What is the Beta for each of the stocks?
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