Risk and Return Illustration 28


1

The Returns of 2 Assets, under four possible states of nature, are given below:-          

State of Nature

Probability

Returns on Asset 01

Returns on Asset 02

1

0.10

5%

0%

2

0.30

10%

8%

3

0.50

15%

18%

4

0.10

20%

26%

Find out: (i) Standard Deviation for Asset 01 and Asset 02.

(ii) Co-variance between Returns of Asset 01 and 02.

                                                                                                                     (MU,BFM, Apr. 2011)

 

 

 


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