The possible outcomes for the returns on Stock X and the returns on the market portfolio have been estimated as follows: Each scenario is considered to be equally likely to occur.
-Refer to the information above. Calculate the covariance of the returns of Stock X and the market portfolio.

Question

The possible outcomes for the returns on Stock X and the returns on the market portfolio have been estimated as follows:  Each scenario is considered to be equally likely to occur.
-Refer to the information above. Calculate the covariance of the returns of Stock X and the market portfolio.

Quizplus · Accepted Answer

The covariance of the returns of Stock X and the market portfolio is calculated using the formula: Cov(X, M) = β * σ²(M), where β is the beta of Stock X and σ²(M) is the variance of the market portfolio. Given the choices, D) 50.0%% is the correct answer based on the provided data.

The Possible Outcomes for the Returns on Stock X and the Returns