Financial analysts have estimated the retums on shares of the Woods Corporation and the overall market portfolo under two economic states nature as follows For Woods the state dependent retums are -0.02 in recession, and 0.001 economic boom. For the market the state dependent retums are 0.08 in recession, and 0.12 in boom. The analyst estimates that the probability of a recession is 0.50 while the probability of an economic boom is 0.50 Compute the covenance between Woods and the market State your answer in decimal form, working your analysis using at least five decimal places of accuracy CHECK ANSWER
Financial analysts have estimated the retums on shares of the Woods Corporation and the overall market portfolo under two economic states nature as follows For Woods the state dependent retums are -0.02 in recession, and 0.001 economic boom. For the market the state dependent retums are 0.08 in recession, and 0.12 in boom. The analyst estimates that the probability of a recession is 0.50 while the probability of an economic boom is 0.50 Compute the covenance between Woods and the market State your answer in decimal form, working your analysis using at least five decimal places of accuracy CHECK ANSWER
Essentials of Business Analytics (MindTap Course List)
2nd Edition
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Chapter15: Decision Analysis
Section: Chapter Questions
Problem 4P: Investment advisors estimated the stock market returns for four market segments: computers,...
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