Probabilities and possible returns of share X have been projected as below based on different statutes of an economy. Required: a) Calculate the expected return if you buy this share. b) Calculate the variance and standard deviation.

The Capital Asset Pricing Model (CAPM) describes a relationship between the expected return of,,,  a)An individual share and its variance risk b)An individual share and its standard deviation risk c)An individual share and its undiversifiable risk d)An individual share and its diversifiable risk

Remember, the expected value of a probability distribution is a statistical measure of the average (mean) value expected to occur during all possible circumstances. To compute an asset’s expected return under a range of possible circumstances (or states of nature), multiply the anticipated return expected to result during each state of nature by its probability of occurrence. Consider the following case: James owns a two-stock portfolio that invests in Blue Llama Mining Company (BLM) and Hungry Whale Electronics (HWE). Three-quarters of James’s portfolio value consists of BLM’s shares, and the balance consists of HWE’s shares. Each stock’s expected return for the next year will depend on forecasted market conditions. The expected returns from the stocks in different market conditions are detailed in the following table: Market Condition Probability of Occurrence Blue Llama Mining Hungry Whale Electronics Strong 0.25 27.5% 38.5% Normal 0.45 16.5% 22% Weak 0.30 -22%…

Explain the meaning and differences between the correlation coefficients “p” in the traditional portfolio and the beta “B” coefficients in the capital asset pricing model (CMPL) approach