Question: 1.0 Consider two risky assets with returns Ki and K2 as follows: (0.03, 0.04) with probability with probability (Ki, K2)- (0.0,0.0) (-0.03, -0.01) with probability3

1.0 Consider two risky assets with returns Ki and K2 as

1.0 Consider two risky assets with returns Ki and K2 as follows: (0.03, 0.04) with probability with probability (Ki, K2)- (0.0,0.0) (-0.03, -0.01) with probability3 the mean and variance of K1 (We usually call these | and the mean and variance of K2 (we usually call these 2 and . the covariance c1,2 coo(K 1: K2) and the correlation 1,2-2 1.0 Consider two risky assets with returns Ki and K2 as follows: (0.03, 0.04) with probability with probability (Ki, K2)- (0.0,0.0) (-0.03, -0.01) with probability3 the mean and variance of K1 (We usually call these | and the mean and variance of K2 (we usually call these 2 and . the covariance c1,2 coo(K 1: K2) and the correlation 1,2-2

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