Question: You are given the following information:
State of
Economy |
Return on Stock A |
Return on Stock B |
| Bear |
.105 |
-.048 |
| Normal |
.112 |
.151 |
| Bull |
.076 |
.236 |
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).)
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).)
What is the covariance between the returns of the two stocks? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 6 decimal places (e.g., 32.161616).)
What is the correlation between the returns of the two stocks? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 4 decimal places (e.g., 32.1616).)