Calculate the covariance between the returns of stock

Reference no: EM13332712

Portfolios with more than one asset: 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 11.75 percent and 18 percent, respectively.

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: EM13332712

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