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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