MGT 201 - Quantitative Analysis
MGT 201 - Quantitative Analysis Homework 4 1. You are trying to develop a strategy for investing in two different stocks. The anticipated annual return for a $1,000 investment in each stock under four different economic conditions has the following probability distribution: Returns Probability Economic Condition Stock X Stock Y 0.1 Recession -50 -100 0.3 Slow growth 20 50 0.4 Moderate growth 100 130 0.2 Fast growth 150 200 Compute the (a) expected return for stock X and for stock Y. (b) standard deviation for stock X and for stock Y. (c) covariance of stock X and stock Y. (d) Would you invest