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Problem 6-03The following are the monthly rates of return for MadisonCookies and for Sophie Electric during a six-month period.MonthMadison CookiesSophie Electric1-0.020.0620.06-0.023-0.07-0.1040.090.185-0.02-0.0660.050.02Compute the following. Do not round intermediate calculations.Round your answers to four decimal places.Average monthly rate of return R?i for eachstock.Madison Cookies:Sophie Electric:Standard deviation of returns for each stock.Madison Cookies:Sophie Electric:Covariance between the rates of return.The correlation coefficient between the rates of return.Would these two stocks be good choices for diversification? Whyor why not?Madison Cookies and Sophie Electric are (Select-good, bad)choices for diversification as these assets have (Select-highpositive, high negative, low positive, low negative)correlation.
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