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BaLLatris [955]
2 years ago
3

10. Security X has expected return of 12% and standard deviation of 20%. Security Y has expected return of 15% and standard devi

ation of 27%. If the two securities have a correlation coefficient of 0.7, what is their covariance
Business
1 answer:
Lelu [443]2 years ago
3 0

Answer: 0.0378

Explanation:

The Covariance of securities refer to the relationship between two securities in terms of their movement together. A postie covariance means that securities usually move in the same direction while a negative means that they move in opposite directions. It can therefore be useful in portfolio diversification.

The formula is;

= Standard deviation of X * Standard deviation of Y * Correlation Coefficeint

= 20% * 27 * 0.7

= 0.0378

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Answer:

Explanation:

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The supply of product x is elastic if the price of x rises by
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