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Viktor [21]
2 years ago
15

Security M has expected return of 17% and standard deviation of 32%. Security S has expected return of 13% and standard deviatio

n of 19%. If the two securities have a correlation coefficient of 0.78, what is their covariance
Business
1 answer:
Murljashka [212]2 years ago
5 0

Answer:

0.047424

Explanation:

Given that

Expected return of security M = 17%

Standard deviation of Security M = 32%

Expected return of security S = 13%

Standard deviation of security S = 19%

And, the correlation coefficient = 0.78

So, by considering the above information the co variance is

=  Correlation coefficient × Standard deviation of Security M × Standard deviation of security S

= 0.78 × 0.32 × 0.19

= 0.047424

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