You are given the following information:
State of Economy 
Return on Stock A 
Return on Stock B 

Bear  .119  .062  
Normal  .098  .165  
Bull  .090  .250  
Assume each state of the economy is equally likely to happen.
Calculate the expected return of each stock. (Do not round
intermediate calculations. Enter your answers as a percent rounded
to 2 decimal places, e.g., 32.16.)
Expected return  
Stock A  ______% 
Stock B  ______% 
Calculate the standard deviation of each stock. (Do not
round intermediate calculations. Enter your answers as a percent
rounded to 2 decimal places, e.g., 32.16.)
Standard deviation  
Stock A  _______% 
Stock B  _______% 
What is the covariance between the returns of the two stocks?
(A negative answer should be indicated by a minus sign. Do
not round intermediate calculations and round your answer to 6
decimal places, e.g., 32.161616.)
Covariance _________
What is the correlation between the returns of the two stocks?
(A negative answer should be indicated by a minus sign. Do
not round intermediate calculations and round your answer to 4
decimal places, e.g., 32.1616.)
Correlation _________
1.
Stock A=(0.119+0.098+0.09)/3=0.1023333
Stock B=(0.062+0.165+0.25)/3=0.117666667
2.
Stock
A=sqrt(1/3*(0.1190.1023333)^2+1/3*(0.0980.1023333)^2+1/3*(0.090.1023333)^2)=0.01223
Stock
B=sqrt(1/3*(0.0620.117666667)^2+1/3*(0.1650.117666667)^2+1/3*(0.250.117666667)^2)=0.13170
3.
=sqrt(1/3*(0.1190.1023333)*(0.0620.117666667)+1/3*(0.0980.1023333)*(0.1650.117666667)+1/3*(0.090.1023333)*(0.250.117666667))
=0.001610556
4.
=0.001610556/(0.01223*0.13170)
=1
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