What is the maximum amount that Karen may deduct for contributions to her IRA for 2016?
January 3, 2018
calculate Keith’s moving expenses deduction using Form 3903. View Solution:
January 3, 2018

On the assumption that the prices of the assets at close of trading today are $20.5 and $40.5, update the correlation estimate.

Finance Basics

Suppose that the daily volatilities of asset A and asset B calculated at close of trading yesterday are 1.6% and 2.5%, respectively. The prices of the assets at close of trading yesterday were $20 and $40, and the estimate of the coefficient of correlation between the returns on the two assets made at close of trading yesterday was 0.25. The parameter used in the EWMA model is 0.95. (a) Calculate the current estimate of the covariance between the assets. (b) On the assumption that the prices of the assets at close of trading today are $20.5 and $40.5, update the correlation estimate.

 

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