# Could you explain how to use Covariance?

6*. Estimates of the expected returns, standard deviations and correlation coefficients for the possible rates of return on three stocks are:

*Please see attachment.

(b) If equal investments are made in all three stocks, what is the expected return and the standard deviation of the return from the portfolio?

v(w) = 1/9 (102 + 122 + 42 + 2 x 12 x 4x (-1.00) + 2 x 10 x 4x (-0.5) + 2 x 10 x 12 x (0.5) *Please see attachment

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Please see the attachment.

Posting ID: 426719 Subject: Statistics Topic: All Topics Level: Year 1

Could you explain how to use Covariance?

Credit Value: 3 Deadline: September 28, 2011, 8:19 pm

6*. Estimates of the expected returns, standard deviations and correlation coefficients for the possible rates of return on three stocks are:

*Please see attachment.

(b) If equal investments are ...

#### Solution Summary

The expert explains the covariance. The expected returns are estimated.