RAD The team of analysts from Red Cap Investment obtained the following return indices for stocks...

 

 

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RAD The team of analysts from Red Cap Investment obtained the following return indices for stocks in the manufacturing and agricultural sectors. The results are presented in the table below. Probability Manufacturing index Agriculture index 0.2 -5% -8% 0.7 20% 15% 0.1 30% 28% Given the data, answer the following questions. a) What is the expected return of both indices? (2 Marks) b) What is the covariance of the manufacturing and agricultural indices? Interpret the results. (5 Marks) Remember to show ALL your workings; marks are allocated based on the details provided. RAD The team of analysts from Red Cap Investment obtained the following return indices for stocks in the manufacturing and agricultural sectors. The results are presented in the table below. Probability Manufacturing index Agriculture index 0.2 -5% -8% 0.7 20% 15% 0.1 30% 28% Given the data, answer the following questions. a) What is the expected return of both indices? (2 Marks) b) What is the covariance of the manufacturing and agricultural indices? Interpret the results. (5 Marks) Remember to show ALL your workings; marks are allocated based on the details provided.