Question: 6. Given the returns and probabilities for the three possible states listed here, calculate the covariance between the returns of Share of Myer and shares

6. Given the returns and probabilities for the three possible states listed here, calculate the covariance between the returns of Share of Myer and shares of David Jones. For convenience, I assume that the expected returns of Myer (M) and David Jones (DJ) are 10 per cent and 8 per cent, respectively. a. 0.0889 b. 0.0783 C. *0.0614 d. 0.0937 Probability Return (M) Return (DJ) Boom 0.55 0.30 0.45 Neutral 0.25 0.28 0.20 Bust 0.20 -0.155 -0.22

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