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(10%) Question 2: The ABC stock return and the XYZ stock return depend on the state of economy: State of the economy Probability of the

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(10%) Question 2: The ABC stock return and the XYZ stock return depend on the state of economy: State of the economy Probability of the state 0.20 0.35 0.45 ABC stock return -0.10 -0.05 0.00 XYZ stock return -0.05 0.00 0.00 What is the correlation between the ABC stock return and the XYZ stock return? a) 0.0625 b) 0.815 c) 1.0 d) 0.0 e) 0.521

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