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# Consider two stocks, A, B. Over the investment horizon, only three equally likely scenarios are possible. The

returns on stock A in scenarios one, two and three are, respectively, RA1 = 3%, RA2 = 24% and RA3 = 3%. The corresponding returns for stock B are RB1 = −4%, RB2 = 20% and RB3 = 20%.

Compute the expected return and standard deviation of stocks A and B , as well as, the correlation coeﬃcient between A and B.

Question a. Stock Returns Stock A =... View the full answer

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