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Question 4 [15 marks] Show calculations no excel Compute the correlation coefficient between the two securities below: (12) Probability Security A Security B 20% 7%
Question 4 [15 marks] Show calculations no excel
Compute the correlation coefficient between the two securities below: (12)
Probability Security A Security B
20% 7% 9%
40% 5% 6%
30% 7% 4%
10% 15% 6%
If two securities are uncorrelated, one of the securities must be the risk-free security. How valid is this statement based on the calculation of the correlation coefficient in this instance? (3)
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