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Calculate the covariance

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Question 1: Given the returns and probabilities for the three possible states listed here, calculate the covariance between the returns of Stock A and Stock B. For convenience, assume that the expected returns of Stock A and Stock B are 0.09 and 0.18, respectively. (Round your answer to 4 decimal places. For example .1244)

                      Probability          Return(A)                 Return(B)

Good                0.35                  0.30                   0.50

OK                   0.50                  0.10                   0.10

Poor                0.15                    -0.25                 -0.30

Reference no: EM132488964

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