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State of Nature………..Probability…………….State Dependent Return A………….State Dependent Return B Recession……………………..70%................................-0.08 ………………………………………………-0.04 Expansion.....................30%.................................0.28………………………

State of Nature………..Probability…………….State Dependent Return A………….State Dependent Return B Recession……………………..70%................................-0.08 ………………………………………………-0.04

Expansion.....................30%.................................0.28……………………………………………….0.16

What comes closest to the covariance between Stock A and Stock B?

a.

.0028
b.

.1170
c.

-.0028
d.

.0000
e.

.0151

Solutions

Expert Solution

SIMPLE CALCULATIONS, NO EXCEL FUNCTION IS USED

jeff jeffy answered 6 months ago
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