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3. Your firm believes the following three scenarios summarize likely returns for Assets A and B this coming year: Positive Neutral Negative Asset A
3. Your firm believes the following three scenarios summarize likely returns for Assets A and B this coming year: Positive Neutral Negative Asset A +12% +5% -10% Asset B +4% +4% -5% a. Calculate the covariance of the projected returns of Assets A and B assuming the estimated probabilities of the positive, neutral, and negative scenarios are 30%, 50%, and 20%, respectively.
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