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The correlation between the return of company XYZ and the market return is 0 . 6 , and their standard deviations are 0 . 8
The correlation between the return of company XYZ and the market return is and their standard deviations are and respectively. What is the expected return of XYZ according to CAPM if the riskfree rate is and the market expected return is
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Correlation
The historical rates of return for two companies XYZ and MNP are given below.
a Find correlation between returns of the two companies.
b What can you conclude about strength and direction of the two stocks' comovements?
tableYearXYZMNP
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