Covariance and correlation between returns of two stocks, Finance Basics

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Covariance and correlation between returns of two stocks

Based on the following information, calculate the expected return and standard deviation of each of the following stock. Assume each state of the economy is equally likely to happen. What are the covariance and correlation between the returns of the two stocks?

State of Economy Rate of Return on stock A Rate of Return on stock B

Bear .082% -.065%

Normal .095% .124

Bull .063% .185%

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Finance Basics: Covariance and correlation between returns of two stocks

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Finance Basics: Covariance and correlation between returns of two stocks

Reference No:- TGS045082

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Recent Questions Asked Finance Basics

Q : Net working capital of solar solutions

Q : Expected return on microsoft stock

Q : What does the cross elasticity of demand equal

Q : Amount of interest which was paid on home loan

Q : Covariance and correlation between returns of two stocks

Q : What green''s break-even sales would be

Q : Financial statement purposes

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Q : Find present worth of planned expenditures at interest rate

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Request for Solution File

Ask an Expert for Answer!!

Finance Basics: Covariance and correlation between returns of two stocks

Reference No:- TGS045082

Recent Questions Asked Finance Basics

Q : Net working capital of solar solutions

Q : Expected return on microsoft stock

Q : What does the cross elasticity of demand equal

Q : Amount of interest which was paid on home loan

Q : Covariance and correlation between returns of two stocks

Q : What green''s break-even sales would be

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Q : Find present worth of planned expenditures at interest rate

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