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Answer the following question:

Question 1: What are the expected returns for Stocks X and Y, E(rX) and E(rY)?

Question 2: What are the standard deviations of the returns for Stocks X and Y, X and? Y?

Question 3: Suppose you have $1000 to invest, and decide to invest $700 in Stock X and $300 in Stock Y. What are the expected return and standard deviation of the return on your portfolio, E(rP) and ?P?

Market Condition Probability Return on Stock X Return on Stock Y

Bear Market 0.3 -3% -5%

Normal Market 0.5 3% 5%

Bull Market 0.2 8% 15%

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91146245

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