Horse Stock returns have a standard deviation of 0.57, whereas Mod T Stock returns have a standard deviation of 0.63. The correlation coefficient between the returns is 0.078042. What is the covariance of the returns

0.028025

Explanation:

Calculation for the covariance of the returns

Using this formula

Covariance of the returns=Correlation coefficient between the returns*Stock returns standard deviation*Mod T Stock returns standard deviation

Let plug in the formula

Covariance of the returns=(0.078042)*(0.57)*(0.63)

Covariance of the returns=0.028025

Therefore the Covariance of the returns will be 0.028025

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