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Given the returns and probabilities for the three possible states listed here, calculate the covariance between the returns of Stock A and Stock B. For convenience, assume that the expected returns of Stock A and Stock B are 0.10 and 0.19, respectively.

Probability Return (A) Return (B)

Good 0.35 0.30 0.50

OK 0.50 0.10 0.10

Poor 0.15 - .025 - 0.30

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91267886

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