Question
Consider the following probability distribution for stocks A and B: State Probability Return on Stock A Return on Stock B 1 0.10 10% 8% 2
Consider the following probability distribution for stocks A and B:
| State | Probability | Return on Stock A | Return on Stock B |
| 1 | 0.10 | 10% | 8% |
| 2 | 0.20 | 13% | 7% |
| 3 | 0.20 | 12% | 6% |
| 4 | 0.30 | 14% | 9% |
| 5 | 0.20 | 15% | 8% |
The coefficient of correlation between A and B is
(Hint: compute variance and covariance first.)
Group of answer choices
0.47.
none of the above.
0.60.
0.58
1.20.
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Entrepreneurial Finance Strategy, Valuation, And Deal Structure
Authors: Janet Smith, Richard Smith, Richard Bliss
1st Edition
0804770913, 9780804770910
