Suppose that the economic prospects in one year are reduced to four possible scenarios with the...

 

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Suppose that the economic prospects in one year are reduced to four possible scenarios with the probabilities displayed below. The volatilities of A and B are 15.53% and 21.06%, respectively. What is the correlation between A and B? Probability 0.30 0.50 0.15 30% 10% 5% B -4% 40% 12% Suppose that the economic prospects in one year are reduced to four possible scenarios with the probabilities displayed below. The volatilities of A and B are 15.53% and 21.06%, respectively. What is the correlation between A and B? Probability 0.30 0.50 0.15 30% 10% 5% B -4% 40% 12%

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To calculate the correlation between scenarios A and B we first need to find the covariance between ... View the full answer