Question
In: Finance
What is the correlation between stocks X and Z? State of the Economy Probability of Occurrence...
What is the correlation between stocks X and Z?
|
State of the Economy |
Probability of Occurrence |
Stock X Expected Return |
Stock Y Expected Return |
Stock Z Expected Return |
|
Recession |
35% |
25% |
-10% |
15% |
|
Average |
45% |
14% |
8% |
25% |
|
Boom |
20% |
4% |
14% |
-10% |
|
0.96 |
|
0.51 |
|
-0.26 |
|
0.26 |
Solutions
Expert Solution
| Coefficient of Correlation = | 50.93/(7.68*13.03) | ||
| 0.51 | |||
| Option B is correct |
jeff jeffy answered 3 years agoRelated Solutions
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expected return on stock B
High growth
0.1
60%
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0.2
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0.5
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Probability of
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Rate of Return
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Stock B
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.25
.27
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.11
Normal
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8.71...
consider the following information about three stocks: state of economy. probability of state of &
consider the following information about three
stocks:
state of economy. probability of state
of
economy
boom.
0.20
normal.
0.55
bust.
0.25
rate of return if state occurs
stock
A.
Stock
B.
stock C
0.38.
0.50.
0.50
0.16.
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a-1. if your portfolio is invested 30%each in A and B
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Consider the following information on Stocks I and II: State of Economy Probability of State of...
Consider the
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Probability of
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Rate of Return if
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Stock I
Stock II
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.20
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Stock II
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The market risk premium is 11.7 percent, and the risk-free rate is
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Probability
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Stock A
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Stock B
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Stock C
Rate of Return
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.55
Normal
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.15
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a.
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a.
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