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Maksim231197 [3]
2 years ago
15

Two securities have a covariance of 0.022. If their correlation coefficient is 0.52 and one has a standard deviation of 15%, wha

t must be the standard deviation of the other security?
Business
1 answer:
ira [324]2 years ago
3 0

Answer: 28.2%

Explanation:

Correlation Coefficient = Covariance / (Standard deviation of Security A * Standard deviation of Security B)

0.52 = 0.022 /( 15% * σ)

(15% * σ) * 0.52 = 0.022

15% * σ = 0.022 / 0.52

σ = 0.0423/15%

= 28.2%

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