Question

Question Completion Status: QUESTION 18 5 p Stock Y Retums Use the following information to answer the next three questions Month Stock X Returns 1/1/2013 -0.25 1/1/2012 0.3 1/1/2011 0.4 -0.15 0.65 Find the covariance between stocks X&Y. Round intermediate steps and your final answer to four decimals. 0333 0463 0308 Click Save and Submit to save and submit. Click Save All Answers to save all answers. Save All Answers

Answer 1

Page x (x-x) (Y-Y) (x-x) (y-7) (x-7)(y-75 -0.25 - 0.3 0.4 0.45 Y al -0.15 0.65 0.60 – 0.40 0.15 0.25 -0.10 -0.35 0.45 0.16 0.0295 0.0625 0.245 0.01 0.1995 0.2025 0.335 0.04 -0.0525 0.1125 0.1 n-l X= 0.45= Exputed return of x = 0.15 y = 0.60 = Expected return of Y = 0.20 Variance of x = {(x-x) = 0.945 = 0.1225 Variance of Y = {(y-ý) Covariance = {(x-7)(y-7) = 0.1 =10.05 09 Slendered devialin of Stock yanad = o.40937 0.335 = 0.1675 2 n- 4 1/ Variance = c(0.1675 (20) Weight of stock Y in minimum variance portfolio Covariance - Covariance 0.1225-o.os 01225 t 0.1675-2xo o 5 0.0795 o.19 To. 3815