# Mean, standard deviation, covariance & correlation of return

Securities A & B have the following rates of return & probabilities of occurrence:

Probability ROR on Securities: A B

0.3 -2% 28%

0.3 4% 12%

0.4 20% 3%

a. calculate mean & standard deviation in the return for each asset.

b. calculate the covariance & the correlation coefficient on the returns of the two assets

c. calculate the mean & standard deviation in the return on the following portfolios of the two assets:

(1) 75% in A and 25% in B

(2) 50% in each

(3) 25% in A & 75% in B

ROR: Rate of Return

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#### Solution Summary

Calculates mean, standard deviation, covariance, correlation coefficient, for returns on securities and mean & standard deviation of return for portfolios.