Over the next year, there is a 72% chance of the market being in state 1,...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Over the next year, there is a 72% chance of the market being in state 1, otherwise it is in state 2. Shares in Cornelius.com will earn a return of 5.50% in state 1, and 2.30% in state 2. Shares in GiantBadger will earn a return of 8.30% in state 1, and 1.00% in state 2. What is the covariance of the two security returns? Over the next year, there is a 72% chance of the market being in state 1, otherwise it is in state 2. Shares in Cornelius.com will earn a return of 5.50% in state 1, and 2.30% in state 2. Shares in GiantBadger will earn a return of 8.30% in state 1, and 1.00% in state 2. What is the covariance of the two security returns?
Expert Answer:
Answer rating: 100% (QA)
To find the covariance of the returns of Corneliuscom and GiantBadger ... View the full answer
Related Book For
Managerial Decision Modeling With Spreadsheets
ISBN: 9780136115830
3rd Edition
Authors: Nagraj Balakrishnan, Barry Render, Jr. Ralph M. Stair
Posted Date:
Students also viewed these accounting questions
-
An analyst thinks that next year there is a 20% chance that the world economy will be good, a 50% chance that it will be neutral, and a 30% chance that it will be poor. She also predicts...
-
Expected inflation over the next year is E[p] = 10%. What nominal interest rate i should investors charge on the following assets? a. Investors require a real rate of return of = 2 percent on a...
-
An individual wishes to invest $5000 over the next year in two types of investment: Investment A yields 5% and investment B yields 8%. Market research recommends an allocation of at least 25% in A...
-
How can your knowledge of meat and meat cookery be used to understand protein substitutions for vegan dishes, such as tofu, texturized soy protein, grains, or beans?
-
Prepare an entity relationship diagram, in good form, for the expenditure cycle, which consists of both purchasing and cash disbursements. Describe the represented by the cardinalities is the...
-
What has been the impact of deregulation on the relative wages and employment of unionized workers in the airline and trucking industries? What factors help explain the difference in outcomes between...
-
Suppose $X_{1} \sim N(10,25)$ and $X_{2} \sim N(5,4)$ in a population. You randomly select 100 samples from the population and assign treatment $A$ to half of the sample and $B$ to the rest. Simulate...
-
A brick maker (BM) in Alberta mixes dry ink into its bricks to make them brown. BMs demand for dry ink is 60 tons per year. Currently, BM buys the dry ink from an import merchant that buys the ink...
-
- - - You have accepted a manager position with a new company In this company, business units do not need to convert CO2 grams to metric tons Upon arrival, you received a performance goal to reduce...
-
Let X be the winnings of a gambler. Let p(i) = P(X = i) and suppose that Compute the conditional probability that the gambler wins i , i = 1, 2, 3, given that he wins a positive amount. 1/3: p(1) %3...
-
5. A year ago, a German investor bought a piece of land in Canada for $1,000,000 CAD. The exchange rate at the time was 0.6723 Euro per CAD. The German investor borrowed all the money in Euros using...
-
During the due diligence phase of a pharmaceutical companys acquisition, you discover that an executive of the potential target may have funneled payments to government regulators overseeing the...
-
Your company acquires another company in China. When you start to transform the organizational structure to that commonly used by your company at home and in other countries, you encounter...
-
Review the opening vignette about the three bicycle manufacturers. Use the strategy-diamond and the generic strategy model to describe the positioning strategy of each firm. Based on what you know...
-
Identify a firm that is looking for a new CEO (or pick one whose CEO you think should be replaced!). Using the box entitled How Would You Do That? 1 as a model, imagine that a firm is turning toward...
-
Assume that there are two sectors in an economy: goods (G) and services (S). Both sectors are perfectly competitive, with large numbers of firms and constant returns to scale. As income rises,...
-
1 of / / De v da if it converges. You may calculate the limit by appealing to the dominance of one function over another, or by l'Hopital's rule. NOTE: Enter the exact answer or round to three...
-
Use the T account for Cash below to record the portion of each of the following transactions, if any that affect cash. How do these transactions affect the companys liquidity? Jan. 2 Provided...
-
A start-up publishing company estimates that the fixed costs of its first major project will be $190,000, the variable cost will be $18, and the selling price per book will be $34. (a) How many books...
-
The Central Police Department has five detective squads available for assignment to five open crime cases. The chief of detectives wishes to assign the squads so that the total time to conclude the...
-
Use Solver to create the Sensitivity Report for this LP problem. Use this report to answer the following questions. Each question is independent of the others. (a) Interpret the shadow prices for the...
-
Analysis of Canadian Manufacturing Workers Workhours. The time plot in Figure 18 . 22 describes the average annual number of weekly hours spent by Canadian manufacturing workers...
-
Souvenir Sales. The file SouvenirSales.csv contains monthly sales for a souvenir shop at a beach resort town in Queensland, Australia, between 1995 and 2001. [Source: Hyndman and Yang (2018).] Back...
-
Toys R US Revenues. Figure 18 . 23 is a time plot of the quarterly revenues of Toys R US between 1992 and 1995 (thanks to Chris Albright for suggesting the use of these data, which are available in...
Study smarter with the SolutionInn App