Finance

Based on the following information determine the covariance and correlation between the returns of the two stocks.

State of Economy	Probability of State of Economy	Return of X	Return of Y
Bear	0.35	-0.02	0.034
Normal	0.60	0.138	0.062
Bull	0.05	0.218	0.092

Cov = 0.001243,Corr=0.9794

Cov = 0.001243,Corr=0.00025

Cov= 0.001469,Corr=0.9610

Your stock portfolio contains 4 stocks with the following betas and weight as a percentage of your portfolio.  What is the portfolio beta?

	Weight	Beta
Stock     A	10 pct.	0.75
Stock     B	35 pct.	1.90
Stock     C	20 pct.	1.38
Stock     D	35 pct.	1.16

1.42

1.30

1.36

You are constructing a two stock portfolio based on the information provided below. What dollar amount will you invest in each stock to achieve the desired return goal?

	Stock X	Stock Y
Expected Return	14.0%	9.0%

Goal Return of Portfolio:    10.00%

Dollar Amount to Invest:    $20,000

X = $4,000; Y = $16,000

X = $16,000Y = $4,000

X = $13,600; Y = $6,400

A firm you are analyzing has had the following returns the past 5 years: 27.0%, 33.0%, -40.0%, -14.0% and 22.0 %. What are the standard deviation and variance of the past five year returns?

0.3139, 0.0985

0.2808, 0.0788

0.3139, 0.0788

A stock has had returns of 16.12%, 12.11%, 5.83%, 26.14%, and -13.19% over the past five years. What was the holding period return for the stock?

50.86%

150.86%

58.04%