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HELP PLEASE, WILL LEAVE LIKE. I can't figure out how the work to reach the anwer!! Q18 (4 pts) Suppose you predict that the market
HELP PLEASE, WILL LEAVE LIKE. I can't figure out how the work to reach the anwer!!
Q18 (4 pts) Suppose you predict that the market portfolio will have a 5\% return next year if the economy is in expansion and a 5% return if the economy is in recession. The probability of an expansion is 50%, and the probability of a recession is 50%. There is a 2x leveraged market ETF (you can think of this as a stock) which doubles the market portfolio return. In other words, in expansion, it has a 10% return, and in recession, it has a 10% return. What is the correlation between the market portfolio and the 2x leveraged market ETF? A. -1 B. -0.5 C. 0 D. 0.5 E. 1Step by Step Solution
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