BUSINESS FINANCE I Dersi Risk and Return soru detayı:
SORU:
What are the steps of calculating the covariance between Compatible and Divergent?
CEVAP: The first step in the calculation is to calculate their differences from their relative means (Rct - Rc ) and (Rdt - Rd ), and multiply them with each other for each state of the economy. Second, taking a weighted average of these terms gives us the covariance. When both returns tend to be above or below their relative averages at the same time, then the covariance becomes positive, and negative when they tend to diverge.
The first step in the calculation is to calculate their differences from their relative means (Rct - Rc ) and (Rdt - Rd ), and multiply them with each other for each state of the economy. Second, taking a weighted average of these terms gives us the covariance. When both returns tend to be above or below their relative averages at the same time, then the covariance becomes positive, and negative when they tend to diverge.