Given the returns and probabilities for the three possible states
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 0.12 and 0.15, respectively. (Round your answer to 4 decimal places. For example .1244)
Probablity return A Return B
Good .35 .30 .50
ok .50 .10 .10
poor .15 -.25 -.30