Stock A is expected to return 12 percent in a normal economy and lose 7 percent in a recession.Stock B is expected to return 8 percent in a normal economy and 2 percent in a recession.The probability of the economy being normal is 80 percent and the probability of a recession is 20 percent.What is the covariance of these two securities?
A).004203
B).004115
C).003280
D).003876
E).003915

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The Answer of Stock A is expected to return 12 percent in a normal economy and lose 7 percent in a recession.Stock B is expected to return 8 percent in a normal economy and 2 percent in a recession.The probability of the economy being normal is 80 percent and the probability of a recession is 20 percent.What is the covariance of these two securities?
A).004203
B).004115
C).003280
D).003876
E).003915

Stock a Is Expected to Return 12 Percent in a Normal