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State of economy Probability of state Rate of return Stock A Stock B Boom 0.4 0.05 -0.03 Normal 0.6 0.12 0.14 Given the above information,

State of economy Probability of state Rate of return

Stock A Stock B

Boom 0.4 0.05 -0.03

Normal 0.6 0.12 0.14

Given the above information, what is the covariance of stock A and stock B?

a. 0.00275

b. 0.00276

c. 0.00279

d. 0.00281

e. 0.00286

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