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Q1Based on the following information: State of Economy Probability of State of Economy Rate of Return if State Occurs Depression .12 ?.103 Recession .23 .061 Normal .47 .132 Boom .18 .213 Calculate the expected return.(Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Expected return % Calculate the standard deviation. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Standard deviation % Q2.Consider the following information: Rate of Return if State Occurs State of Probability of Economy State of Economy Stock A Stock B Stock C Boom .15 .37 .47 .27 Good .45 .22 .18 .11 Poor .35 ? .04 ? .07 ? .05 Bust .05 ? .18 ? .22 ? .08 a. Your portfolio is invested 20 percent each in A and C, and 60 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16)) Expected return % b-1. What is the variance of this portfolio?(Do not round intermediate calculations and round your answer to 5 decimal places. (e.g., 32.16161)) Variance b-2. What is the standard deviation?(Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16)) Standard deviation % Q3.Stock Y has a beta of 1.8 and an expected return of 18.2 percent. Stock Z has a beta of 0.8 and an expected return of 9.6 percent. If the risk-free rate is 5.2 percent and the market risk premium is 6.7 percent, the reward-to-risk ratios for stocks Y and Z areandpercent, respectively. Since the SML reward-to-risk ispercent Q4. Based on the following information: State of Economy Return on Stock A Return on Stock B Bear .107 ?.050 Normal .110 .153 Bull .078 .238 Assume each state of the economy is equally likely to happen. Calculate the expected return of each of the following stocks.(Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)) Expected return Stock A % Stock B % Calculate the standard deviation of each of the following stocks. (Do not round intermediate calculations and round your final answers 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?(Negative amount should be indicated by a minus sign, Do not round intermediate calculation and round your final answer to 6 decimal places. (e.g., 32.161616)) Covariance What is the correlation between the returns of the two stocks?(Negative amount should be indicated by a minus sign, Do not round intermediate calculation round your final answer to 4 decimal places. (e.g., 32.1616)) Correlation

Q1Based on the following information:

State of Economy Probability of
State of Economy
Rate of Return
if State Occurs
Depression .12 ?.103
Recession .23 .061
Normal .47 .132
Boom .18 .213

Calculate the expected return.(Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Expected return %
Calculate the standard deviation. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Standard deviation %
Q2.Consider the following information:
Rate of Return if State Occurs
State of Probability of
Economy State of Economy Stock A Stock B Stock C
Boom .15 .37 .47 .27
Good .45 .22 .18 .11
Poor .35 ? .04 ? .07 ? .05
Bust .05 ? .18 ? .22 ? .08

a. Your portfolio is invested 20 percent each in A and C, and 60 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))
Expected return %
b1. What is the variance of this portfolio?(Do not round intermediate calculations and round your answer to 5 decimal places. (e.g., 32.16161))
Variance
b2. What is the standard deviation?(Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))
Standard deviation %

Q3.Stock Y has a beta of 1.8 and an expected return of 18.2 percent. Stock Z has a beta of 0.8 and an expected return of 9.6 percent. If the risk-free rate is 5.2 percent and the market risk premium is 6.7 percent, the reward-to-risk ratios for stocks Y and Z areandpercent, respectively. Since the SML reward-to-risk ispercent

Q4. Based on the following information:
State of
Economy
Return on
Stock A
Return on
Stock B
Bear .107 ?.050
Normal .110 .153
Bull .078 .238

Assume each state of the economy is equally likely to happen.
Calculate the expected return of each of the following stocks.(Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))
Expected return
Stock A %
Stock B %

Calculate the standard deviation of each of the following stocks. (Do not round intermediate calculations and round your final answers 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?(Negative amount should be indicated by a minus sign, Do not round intermediate calculation and round your final answer to 6 decimal places. (e.g., 32.161616))
Covariance
What is the correlation between the returns of the two stocks?(Negative amount should be indicated by a minus sign, Do not round intermediate calculation round your final answer to 4 decimal places. (e.g., 32.1616))
Correlation

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