Question

YEAR	X	Y
2009	1000	9000
2010	800	12500
2011	650	15000
2012	1200	11000
2013	1100	10500
2014	1300	12000
2015	1250	11000
2016	3000	8000
2017	4000	7500
2018	10000	5500
2019	15000	1000
2020	14000	1500
What is expectation of X and Y
The revenue generated by both is 3:5X + 2:6Y
(i) What is the expected revenue generated by these two?
(ii) What is the variance and the standard deviation of the revenue?
What is variance and the standard deviation of X and Y
What is the covariance between X and Y ? What is their correlation?

TASK 2
the mean of X is 7% and its standard deviation is 3.5%, and the mean of Y is 9%
and its standard deviation is 11%. Suppose also that CORR(X,Y) = 0.45.
(a) Consider a portfolio consisting of investing 65% into Dow Jones and 35% into
Nikkei. What is the mean return of this portfolio?
(b) What is the standard deviation of the return of this portfolio?

Answer 1

**Here mandotorily you need to provide for the second question jones and nokki, who is X and who is Y