Question $10(10$ points$)$

Consider four states of the economy: Boom, Good, Poor and Bust. The probability of these are as follows: $[26\mathrm{.}47\%,44\mathrm{.}79\%,16\mathrm{.}79\%,11\mathrm{.}95\%],$ for each of these states of the economy the return for stock A would be: $[49\mathrm{.}02\%,32\mathrm{.}64\%,14\mathrm{.}17\%,5\mathrm{.}95\%]$; for stock $B$ would be: $30\mathrm{.}68\%,5\mathrm{.}39\%,3\mathrm{.}74\%,6\mathrm{.}72\%.$ What is the correlation between these two risky assets? NOTE: Answer in decimalsd, your answer must have four digits after the dot.

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A

Question $11(5$ points$)$

Consider four states of the economy: Boom, Good, Poor and Bust. The probability of these are as follows: $[27\mathrm{.}61\%,43\mathrm{.}73\%,16\mathrm{.}59\%,12\mathrm{.}07\%],$ for each of these states of the economy the return for stock A would be: $[22\mathrm{.}73\%,9\mathrm{.}21\%,3\mathrm{.}06\%,-9\mathrm{.}85\%]$; for stock $B$ would be: $-20\mathrm{.}9\%,10\mathrm{.}22\%,-3\mathrm{.}96\%,-6\mathrm{.}06\%.$ What is the correlation between these two risky assets? NOTE: Answer in decimalsd, your answer must have four digits after the dot.