Calculate The Expected Return And Standard Deviation

Scenario Probability X return rate Y return rateBoom 25% 15% 10%Normal 60% 10% 9%Recession 15% 5% 10%1. Calculate the expected return and standard deviation of returns of each stock. 2. Calculate the expected return and standard deviation of return for a portfolio with an investment of $6,000 (60%) in stock X and $4,000 (40%) in stock Y. In order to do so, you need to calculate the variance and standard deviation of each stock and the covariance of returns between stock X and stock Y. Thank you!!

Calculate The Expected Return And Standard Deviation

Calculate the expected return and standard deviation of for single stocks and portfolioYou have estimated the following probability distributions of expected future returns from stocks X and Y: What is the expected return for stock X and Y?Expected return of X = ??Expected return of Y = ??What is the standard deviation of expected returns for stock X and Y?Standard deviation of X = ??Standard deviation of Y = ??Calculate the expected return and standard deviation of the mix of 50% X and 50% Y. Expected return of the mix of 50% X + 50% Y = ??Which stock would you consider to be riskier, X, Y, or 50% X + 50% Y? Why? (hint: calculate the coefficient of variation (COV) = standard deviation / expected return and compare. ) Hints: please study the slides for the explanation of calculations. Cov of X = ??Cov of Y = ??Cov of ( 50% X + 50% Y) = ??Which do you pick? —- ??