Stocks A and B have the following returns: (Click on the folowing icon a in order to copy its contents into a spreadsheet.)Stock AStock B0.080.060.150.050.040.050.01-0.010.09-0.03a. What are the expected roturns of the two stocks?b. What are the standard deviations of the returns of the two stocks?c. If their correlation is 048, what is the expected return and standard deviation of a portfolio of 75% stock A and 25% stock B?a. What are the expected returns of the two stocks?The expected return for stock A is(Round to three decimal places.)

The term expected return of stock refers to the profit or loss amount which investor anticipates on…

Answered: 0.15 0.05 001 -0.03 -0.01 0.09 the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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QUESTION 1 Under which of the following scenarios, the minimum variance portfolio that contains two stocks has the smallest standard deviation? OA. The correlation between the two stock returns is -1 OB. The correlation between the two stock returns is -0.2 OC. The correlation between the two stock returns is 0.2 OD. The correlation between the two stock returns is 0.5

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0.15 0.05 001 -0.03 -0.01 0.09 the expected returns of the two stocks? the standard deviations of the retuns of the two stoc relation is 048, what is the expected retun and stan