Computation of co-variance between two stocks

Reference no: EM1312407

Given the returns and probabilities for the three possible states listed here, calculate the covariance between the returns if 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: EM1312407

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