Question: Given the returns and probabilities for the three possible states listed here, calculate the covariance between the returns of Stock A and Stock B. For
Given the returns and probabilities for the three possible states listed here, calculate the covariance between the returns of Stock A and Stock B. For convenience, assume that the expected returns of Stock A and Stock B are 0.10and0.15, respectively. (Round your answer to 4 decimal places. For example .1244)
Probability return (a) return (b)
Good .35 .30 .50
Ok .50 .10 .10
Poor .15 -.25 -.30
How do I input these numbers into the formula?
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