Calculate covariance between the returns of stock a and b

Reference no: EM13258647

Given the returns and probabilities for the three possible states listed here, calculate the covariance between the returns of Stock A and Stock B. For convenience, assume that the expected returns of Stock A and Stock B are 0.13 and 0.18, respectively.

	Probability	Return(A)	Return(B)
Good	0.35	0.30	0.50
OK	0.50	0.10	0.10
Poor	0.15	-0.25	-0.30

Reference no: EM13258647

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