Question: 4. Stock Covariance 10 Points Given the returns for two stocks with the following information, calculate the covariance of the returns for the two stocks.

4. Stock Covariance 10 Points Given the returns for two stocks with the following information, calculate the covariance of the returns for the two stocks. Return Stock 1 Return Stock 2 Probability 10% 12% 15% 11% 10% 14% E(R) 1 E(R) 2 Cov(RI?R2) 0.4 0.5 Covariance Step 1: E(R)Stock (P) (RS 1) (P2)(RS12) (P3)(RS13) E(R)Stock2 -(P)(RS21) (P2) (RS22)(P3)(RS23) Step 2

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