Consider shock B, which has three possible returns; +50 percens, Oper- cent, &-50 porceN. The three possible rehirns are…

Consider shock B, which has three possible returns; +50 percens, Oper- cent, &-50 porceN. The three possible rehirns are…

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Consider shock B, which has three possible returns; +50 percens, Oper- cent, &-50 porceN. The three possible rehirns are…
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Consider shock B, which has three possible returns; +50 percens, Oper-
cent, &-50 porceN. The three possible rehirns are equally probable!
What is the expected return & standard deviation return
for shock B?
Probability
25
. 25
25
·25
A
10
.05
-20
C
.15
O
25
·05
с
-505
. 10
-15
·05
(1) Compute
the expected returns to each slock.
(11) Compute the standard deviation of returns for each
shocks
il) Compute the covariaces “bet returns on each pair of
shocks.

Expert Answer:

Answer rating: 100% (QA)

i To compute the expected return for Stock B we will multiply each possible return by its correspond
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