Use the following data to answer problems 2 through 4 State of Probability of State Stock A Economy of Economy Rate of Return Recession Normal Boom 2. 0.25 0.55 0.20 a. b -0.15 0.18 0.50 S&P500 Rate of Return 0.02 0.09 0.18 Assume that the S&P500 is your market index. Calculate the variance for the S&P 500's. Calculate the covariance between Stock A and the S&P 500.

2. Assume that the S\&P 500 is your market index. a. Calculate the variance for the S\&P 500 : . b. Calculate the covariance between Stock A and the S\&P 500