There are three possible states of the economy during the next year (states 1, 2, and 3).
Question:
There are three possible states of the economy during the next year (states 1, 2, and 3). The probability of each state of the economy, as well as the percentage annual return on P&G and US Steel, are as shown in Table 5.37. 
a. Find the correlation between the annual return on P&G and US Steel. Interpret this correlation.
b. If you put 80% of your money in P&G and 20% in US Steel, find the mean and standard deviation of your annual return.
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Step by Step Answer:
To find the correlation between the annual return on PG and US Steel we need to calculate the covariance and standard deviations first The formula for ...View the full answer
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Related Book For 
Managerial Statistics
ISBN: 9780534389314
1st Edition
Authors: S. Christian Albright, Wayne L. Winston, Christopher Zappe
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