Suppose that Mr King has two stocks, A B. Let X and Y be random variables of possible percent retur
Question: Suppose that Mr King has two stocks, A & B. Let X and Y be random variables of possible percent returns (0%, 5%, 10%, and 15%) for each of these two stocks with a joint probability distribution given in the following table,
| Y stock Return | ||||
| X stock return | 0% | 5% | 10% | 15% |
| 0% | 0.0625 | 0.0625 | 0.0625 | 0.0625 |
| 5% | 0.0625 | 0.0625 | 0.0625 | 0.0625 |
| 10% | 0.0625 | 0.0625 | 0.0625 | 0.0625 |
| 15% | 0.0625 | 0.0625 | 0.0625 | 0.0625 |
a) Find marginal probabilities between each possible returns of X & Y.
b) Determine if X & Y are independent.
c) Find the means and variances for both X & Y.
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Solution: The solution consists of 2 pages
Type of Deliverable: Word Document
Type of Deliverable: Word Document
