Question: Given the returns and probabilities for the three possible states listed below, calculate the covariance between the returns of Stock A and Stock B. For
Given the returns and probabilities for the three possible states listed below, calculate the covariance between the returns of Stock A and Stock B. For convenience, assume that the expected returns of Stock A and Stock Bare 4.50 percent and 8.00 percent respectively. (Round answer to 4 decimal places, eg. 0.0768.) Return on Stock A Return on Stock B Probability Good 0.25 0.30 0.50 OK 0.45 0.10 0.10 Poor 0.30 -0.25 -0.30 Covariance
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