INVESTMENTS(LL)W/CONNECT
INVESTMENTS(LL)W/CONNECT
11th Edition
ISBN: 9781260433920
Author: Bodie
Publisher: McGraw-Hill Publishing Co.
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Chapter 8, Problem 12PS
Summary Introduction

To calculate: The co-variance between stock and market index.

Introduction: The value of co-variance measures the movement direction of the stocks. If the value is positive means both stocks are moving in same direction. If value is negative means both are moving in opposite direction.

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How does the current price of a stock depend on its own past values, as well as the current and past values of a market index?
What is the difference between stock price indexes that are simple averages of prices and those that are capitalization-weighted? Give examples of each.
What is a market index? How is it used?
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