# calculate the expected return

Learning Goal: I’m working on a data analytics discussion question and need an explanation and answer to help me learn.Chapter 5 Textbook problems # 25, 27, 29, 63

(“bivariate distribution” is the joint distribution)In problem #25, the joint distribution should be interpreted as:X503040Y800.2005000.5060000.3In problem #27 part d, solve for the covariance without using the information on Var(X+Y) (use the method taught in class)In problem #63, the covariance of -12.4 is in the unit %2.Using Excel, generate the graphs on slides 20, 22, 23, 24 of “lecture 4.pptx”. For this question you have to set up a spreadsheet that will allow you to plot the graphs I showed in the lecture. You have all the input parameters needed in the slides (slide 17). For example, for the graph on slide 20 you have to plot the expected return (formula on slide 19) vs. fraction f. Create a column for values of f from 0 to 1, and in the next column you calculate the expected return, then you plot the 2nd column vs the first. For example, the formula for the expected rate of return is E[W] = E[rate_boeing] * f + E[rate_GM] * (1-f) = 9.1 * f + 12.1 * (1-f). Then you have to plot that quantity vs. f when f varies from 0 to 1.

Requirements: 4 problems