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Based on the following information, find out the expected return and standard deviation of each of the following stock. Assume each state of the economy is equally likely to happen. What are the covariance and correlation between the returns of the two stocks?

State of Economy Rate of Return on stock A Rate of Return on stock B

Bear .082% -.065%

Normal .095% .124

Bull .063% .185%

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M945082

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