Answered step by step
Verified Expert Solution
Question
1 Approved Answer
1.) Assume that the standard deviation of returns is 0.5 for security A and 0.68 for security B. The covariance between the two securities' returns
1.) Assume that the standard deviation of returns is 0.5 for security A and 0.68 for security B. The covariance between the two securities' returns is 0.2108. What is the correlation coefficient between the returns of the two? ______(round to two decimal places)
2.)
Apple | Microsoft | Target | Goodyear | |
Standard Deviation | 41% | 22% | 30% | 33% |
Apple | 1 | 0.48 | 0.38 | 0.31 |
Microsoft | 0.48 | 1 | 0.39 | 0.22 |
Target | 0.38 | 0.39 | 1 | 0.50 |
Goodyear | 0.31 | 0.22 | 0.50 | 1 |
The covariance between Microsoft and Goodyear's return is______(round to three decimals)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started