Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. the return on the rush corporation in the state of

The return on the Rush Corporation in the state of recession is estimated to be -25%...

Free

90.2K

Verified Solution

Question

Finance

The return on the Rush Corporation in the state of recession isestimated to be -25% and the return on Rush in thestate of boom is estimated to be 35%. The returnon the Oberman Corporation in the state of recession is estimatedto be 45% and the return on Oberman in the stateof boom is estimated to be -18%. Given thisinformation, what is the covariance between Rush and Oberman ifthere is a 0.50 probability that the economy willbe in the state of boom and a 0.50 probabilitythat the economy will be in the state of recession.

Please give specific calculations, thanks!!!

Answer & Explanation Solved by verified expert
4.3 Ratings (730 Votes)

Rush
Scenario Probability Return% =rate of return% * probability Actual return -expected return(A)% (A)^2* probability
Boom 0.5 35 17.5 30 0.045
Recession 0.5 -25 -12.5 -30 0.045
Expected return %= sum of weighted return = 5 Sum=Variance Rush= 0.09
Standard deviation of Rush% =(Variance)^(1/2) 30
Oberman
Scenario Probability Return% =rate of return% * probability Actual return -expected return(A)% (B)^2* probability
Boom 0.5 -18 -9 -31.5 0.0496125
Recession 0.5 45 22.5 31.5 0.0496125
Expected return %= sum of weighted return = 13.5 Sum=Variance Oberman= 0.09923
Standard deviation of Oberman% =(Variance)^(1/2) 31.5
Covariance Rush Oberman:
Scenario Probability Actual return% -expected return% for A(A) Actual return% -expected return% For B(B) (A)*(B)*probability
Boom 0.5 30 -31.5 -0.04725
Recession 0.5 -30 31.5 -0.04725
Covariance=sum= -0.0945

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Statistics
1.2K views

The score of a course out of 100 in Winter of 10 students are 48, 92,...

Statistics
1.2K views

A research report indicated that in 2018, 59% of all 6th graders owned a cell phone....

Biology
1.2K views

15 Within the chloroplast grana are A the site of carbon fixation reactions C the...

Biology
1.2K views

What is needed to run high-throughput multiplexing (many different samples on the same flow cell)...

Physics
1.2K views

4 A glass rod of radius 1 mm is inserted symmetrically into a glass capillary...

Geometry
1.2K views

What is the value of x G X X 82 X 37 X 43 E...

Basic Math
1.2K views

Let ? be the Lebesque measure on B(R).S= { (n + 2)/ (n + 1),...

Basic Math
1.2K views

How many different two digit numbers can be formed using the digits 6 8 3...

Basic Math
1.2K views

Evaluate the sum.10?(j + 4).j=110?(j + 4) = _______j=1

Accounting
1.2K views

Step costs _______________. Group of answer choices remain the same within the relevant...

Accounting
1.2K views

McGrawHill Connect pints 5 4: Assignment (Homework) i Skipped https://ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launch Watch Dr. Stone: St... Watch...

Finance
1.2K views

The production function for a company is given by P = 20C2/3L1/3, where P is...