An analyst produces the following joint probability function for a foreign index (FI) and a domestic index

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An analyst produces the following joint probability function for a foreign index (FI) and a domestic index (DI).

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The covariance of returns on the foreign index and the returns on the domestic
index is closest to:
A. 26.39.
B. 26.56.
C. 28.12.

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2024 CFA Program Curriculum Level I Volume 1

ISBN: 9781953337672

1st Edition

Authors: CFA Institute

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Question Posted: Feb 01, 2024 08:29 AM

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An analyst produces the following joint probability function for a foreign index (FI) and a domestic index

Question:

RFI = 25% RFI = 15% RFI = 10% RDI = 30% 0.25 RDI = 25% 0.50 RDI = 15% 0.25

Step by Step Answer:

B is correct The covariance is 2656 calculated as follows Firs...View the full answer

2024 CFA Program Curriculum Level I Volume 1

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