Stock a Is Expected to Return 12 Percent in a Normal

question 87

Multiple Choice

Stock A is expected to return 12 percent in a normal economy and lose 7 percent in a recession.Stock B is expected to return 8 percent in a normal economy and 2 percent in a recession.The probability of the economy being normal is 80 percent and the probability of a recession is 20 percent.What is the covariance of these two securities?

• A).004203
• B).004115
• C).003280
• D).003876
• E).003915

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A learning process through watching the actions of others and the consequences of those actions, without direct experience.

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The process by which individuals learn behaviors, norms, and values by observing and imitating others, especially those considered to be role models.

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