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Klio2033 [76]
3 years ago
6

The standard deviation of return on investment A is 10%, while the standard deviation of return on investment B is 5%. If the co

variance of returns on A and B is .0030, the correlation coefficient between the returns on A and B is _________.
Business
1 answer:
ahrayia [7]3 years ago
8 0

Answer:

<em>The answer is 60.</em>

Explanation:

<em>The First step in solving the example given, is to recall the following steps to be taken </em>

<em>The standard deviation of return on investment A =10%</em>

<em>The standard deviation of return on investment B =5%</em>

<em>The co-variance of returns both on A and B =.0030</em>

<em>The next step is as follows</em>

<em>co-variance = correlation </em>

<em>.0030 (.05 x .10) =  60</em>

<em>Therefore the correlation coefficient between the returns of A and B is 60</em>

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