I didn’t finish the last 2 questions. Q29: what is the answer for covariance? Q30: what is the question and answer? Thanks.
In my notes I have 0.0243 which was the two betas multiplied then the Covariance of the Equity multiplied by that if i recall Then the next question i have in my notes was 8.35% which was just the sum of all the numbers - remember a decline in shares outstanding is actually a positive not a negative… The formulas might confused but its a negative of a negative…
willy is correct
The answer key had: E(Re) = 1.95 - (-1.0) + 1.75 + 3.50 + 0.15 = 6.35% But I guess they couldn’t add properly. 8.35% is correct.