State of Nature………..Probability…………….State Dependent Return A………….State Dependent Return B Recession……………………..70%................................-0.08 ………………………………………………-0.04 Expansion.....................30%.................................0.28……………………………………………….0.16 What comes closest to the covariance between Stock...

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Finance

State of Nature………..Probability…………….State Dependent ReturnA………….State Dependent Return BRecession……………………..70%................................-0.08………………………………………………-0.04

Expansion.....................30%.................................0.28……………………………………………….0.16

What comes closest to the covariance between Stock A and StockB?

a.

.0028

b.

.1170

c.

-.0028

d.

.0000

e.

.0151

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