State of Economy Probability ABC Company Expected Return Expected Return XYZ Company Very Poor 0.30 -9% |-19% Poor 0.25 -8% -6% Good 0.15 8% 9% Very Good 0.30 34% 33% Expected Return 6.70% 4.05% A) Calculate the covariance of the portfolio. I Please answer as a decimal to 4 decimal places. Answer:

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
icon
Related questions
Question
State of Economy Probability
ABC Company
Expected Return Expected Return
XYZ Company
Very Poor
0.30
-9%
-19%
Poor
0.25
-8%
-6%
Good
0.15
8%
9%
Very Good
0.30
34%
33%
Expected Return
6.70%
4.05%
A) Calculate the covariance of the portfolio.
Please answer as a decimal to 4 decimal places.
Answer:
Transcribed Image Text:State of Economy Probability ABC Company Expected Return Expected Return XYZ Company Very Poor 0.30 -9% -19% Poor 0.25 -8% -6% Good 0.15 8% 9% Very Good 0.30 34% 33% Expected Return 6.70% 4.05% A) Calculate the covariance of the portfolio. Please answer as a decimal to 4 decimal places. Answer:
Expert Solution
steps

Step by step

Solved in 2 steps with 1 images

Blurred answer
Knowledge Booster
Risk and Return
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education