Question: Question 4 [15 marks] (12) Compute the correlation coefficient between the two securities below Probability 20% 40% 30% 10% Security A 7% 5% 7% 15%

Question 4 [15 marks] (12) Compute the correlation coefficient between the

Question 4 [15 marks] (12) Compute the correlation coefficient between the two securities below Probability 20% 40% 30% 10% Security A 7% 5% 7% 15% Security B 9% 5% 4% 8% If two secunties are uncorrelated, one of the securities must be the risk-free securty How valid is this statement based on the calculation of the correlation coefficient in this instance

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