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Homework answers / question archive / Another stock, stock B, is traded in the market and has the following behavior

Another stock, stock B, is traded in the market and has the following behavior

Statistics

Another stock, stock B, is traded in the market and has the following behavior. If stock A goes up by 80% (which occurs with probability 0.5) then stock B goes down by 80%, and if stock A goes down by 20% (which occurs with probability 0.5), then stock B goes up by 20%. d. [2 points] If you take $1 and split it equally into the two stocks (i.e., 50 cents in each), what is the expected value of the portfolio value in $'s after one day? Answer: e. [2 point] What is the correlation coefficient between stocks A and BY Note: no need for a rigorous derivation and calculations just state the answer and explain your reasoning. Answer:

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