Horse Stock returns have exhibited a standard deviation of 0.57, whereas Mod T Stock returns have a standard deviation of 0.63. The correlation coefficient between the returns is 0.078042. What is the covariance of the returns? Round your answer to six decimal places.
A) 0.028025
B) 0.217327
C) 0.359100
D) 0.993094

Question

Quizplus · Accepted Answer

Covariance is calculated as the product of the correlation coefficient and the standard deviations of the two stocks: 0.078042 * 0.57 * 0.63 = 0.028025.

Horse Stock Returns Have Exhibited a Standard Deviation of 0