The probabilities of an economic boom, normal economy, and a recession are 15 percent, 83 percent, and 2 percent, respectively. For these economic states, Stock A has deviations from its expected returns of .03, .01, and .02 for the three economic states respectively. Stock B has deviations from its expected returns of .15, .06, and .09 for the three economic states, respectively. What is the covariance of the two stocks?

Multiple Choice

• .00021

• .01054

• .02049

• .02143

• .00116