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The return on the Rush Corporation in the state of recession is estimated to be-23% and the return on Rush in the state of boom is estimated to be 33%. The return on the Oberman Corporation in the state of recession is estimated to be 44% and the return on Oberman in the state of boom is estimated to be-17%. Given this information, what is the covariance between Rush and Oberman if there is a 0.60 probability that the economy will be in the state of boom and a 0.40 probability that the economy will be in the state of recessiorn Place your answer in decimal form and not as a percentage.

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Answer #1

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ECONOMIC CONDITION BOOM RECESSION P*R PROB RUSH R-E(R) OBERMAN C-E(C) P*BD 0.6 0.4 19.8 9.2 10.2 17.6000 24.4000 36.6000 -327.936 -491.904 22.4 23 -33.6 E(R) 10.6 E(C) = 7.4000 COVARIANCE -819.8400 ANSWER COVARIANCE = -819.8400

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