Ms. Janet are thinking about investing her money in the stock market. She has the following two stocks in her mind which are stock X and stock Y. She knows that the economy can either go in recession or it will be boom. Being an optimistic investor, she believes the likelihood of observing an economic boom is two times as high as observing an economic depression. Her two stocks details are as follow:

State of the Economy	Probability	RX	RY
Boom	2/3	10%	2%
Recession	1/3	6%	40%

1. Calculate the covariance between stock X and stock Y.
2. Calculate the correlation coefficient between stock X and stock Y.

3. Calculate the variance of the portfolio with equal proportions in both stocks using the covariance from answer (a).

4. Calculate the expected return on a portfolio consisting of equal proportions in both stocks.

5. Calculate the variance of the portfolio with equal proportions in both stocks using the portfolio returns and expected portfolio returns from answer (d).