The Covariance of Investment X and Investment Y is (

EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter8: Risk And Rates Of Return
Section: Chapter Questions
Problem 5PROB
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39. Consider the following information. Assuming this represents the Population.
Investment X
4%
-10%
8%
8
Year
1
2
3
14%
Investment Y
-6%
8%
12%
-2%
Risk Free Rate: 2%
The Covariance of Investment X and Investment Y is (Hint: Covariance = 1/nΣ(xi — Xavg)(yi - Yavg)
A. -32.60
B. -21.00
C. +144.82
D. -103.50
E. +114.34
Transcribed Image Text:39. Consider the following information. Assuming this represents the Population. Investment X 4% -10% 8% 8 Year 1 2 3 14% Investment Y -6% 8% 12% -2% Risk Free Rate: 2% The Covariance of Investment X and Investment Y is (Hint: Covariance = 1/nΣ(xi — Xavg)(yi - Yavg) A. -32.60 B. -21.00 C. +144.82 D. -103.50 E. +114.34
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