Use the following table to answer 2) and 3) State        Probj     R1 (%)      R2 Boom        1/5         15           18 Avg            2/5         6            8 Bad           1/5          -1          -6 Recess     1/5          -6          -8 Find E(R1) and E(R2) . Find E[(R1 – E(R1) )(R2 - 4)]

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Use the following table to answer 2) and 3)

State        Probj     R1 (%)      R2

Boom        1/5         15           18

Avg            2/5         6            8

Bad           1/5          -1          -6

Recess     1/5          -6          -8

  1. Find E(R1) and E(R2) .

  2. Find E[(R1 – E(R1) )(R2 - 4)]

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