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a. Toyota Corp.'s stock price has a variance of returns of 0.0295. Honda Corp.'s stock has a variance of returns of 0.0515. The covariance between Toyota and Honda is 0.0275. What is the correlation coefficient between Toyota and Honda?
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*Use at least four decimal places in your answer.
b. Toyota has an expected return of 23%, and a variance of 0.015. Honda has an expected return of 18%, and a variance of 0.005. The covariance between Toyota and Honda is 0.06. Using these data, calculate the variance of a portfolio consisting of 50% Toyota and 50% Honda.
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