An Investor Is Considering Purchasing an Auto Stock (A) and a Gold

question 61

Essay

An investor is considering purchasing an auto stock (A) and a gold stock (B).If the auto stock is purchased, it is expected that it will provide an -8%, 5% and 18% potential returns during recessionary, normal or boom economies.If a gold stock is purchased, it is expected that it will provide 20%, 3% or -20% returns during the three economic states.All economic states have equal chance of occurring.Based on the above information, determine the correlation between the two stocks.

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Definitions:

Crocodilians

Large aquatic reptiles that include crocodiles, alligators, caimans, and the gharial, known for their tough skin, sharp teeth, and strong jaws.

Reptile Group

A category of ectothermic, vertebrate animals primarily characterized by their ability to lay eggs on land and having scales or scutes.

Birds

A group of endothermic vertebrates characterized by feathers, beaks without teeth, laying of hard-shelled eggs, a high metabolic rate, a four-chambered heart, and a strong yet lightweight skeleton.

Amniote

Vertebrate whose egg has waterproof membranes that allow the embryo to develop away from water; a reptile, bird, or mammal.