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4. (2 points With the information and notation in Example 3.9 in the notes: consider two risky securities with returns K and K given by
4. (2 points With the information and notation in Example 3.9 in the notes: consider two risky securities with returns K and K given by Scenario Probability K K 0.5 10% 7% 0.5 12% 10% calculate Cov(K, K2) and Cov(k, k2). Example (3.9) Consider two risky securities with returns K and K2 given by Scenario Probability K K W1 0.5 10% 7% W2 0.5 12% 10% Compute the corresponding logarithmic returns k and k, compute Var(k), Var(k) and k, Ok
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