Question
Consider the following information on two stocks: State of the Economy Probability of State of Economy Stock 1 Rate of Return Stock 2 Rate of
Consider the following information on two stocks:
| State of the Economy | Probability of State of Economy | Stock 1 Rate of Return | Stock 2 Rate of Return |
| Boom | .35 | .12 | -.28 |
| Normal | .5 | .4 | .09 |
| Bust | .15 | .53 | .48 |
Calculate the covariance and correlation of stock 1 and stock 2.
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The Economics Of Money Banking And Financial Markets
Authors: Frederic S. Mishkin
7th Edition
0321122356, 978-0321122353
