QUESTION 6 (Continued) Step 3-Calculate the covariance of returns between the security and the market portfolio ∑[-kl2 n (0.15-00360.10-05)+(013-0036)0.12-005)+(0.04-0036006-005) Cov(ks, km)= +(-0.12-0.036-004-0.05)+(-0.02-0036001-005) 5-1 (0.114x005)+(094x07)+(0004x001)+(-0.56x-09)+(-0.056x-004) 0.0057+0.00658+0.000004+001404+0.00224 0.0286 0.00715July 2003 QUESTION 6 (Continued) Step 3 – Calculate the covariance of returns between the security and the market portfolio ( )    ( ) ( )( ) ( )( ) ( )( ) ( )( ) ( )( ) ( ) ( ) ( ) ( ) ( ) 0.00715 4 0.0286 4 0.0057 0.00658 0.000004 0.01404 0.00224 4 0.114 x 0.05 0.094 x 0.07 0.004 x 0.01 - 0.156 x - 0.09 - 0.056 x - 0.04 5 -1 - 0.12 - 0.036 0.04 0.05 - 0.02 - 0.036 0.01 0.05 0.15 - 0.036 0.10 0.05 0.13 - 0.036 0.12 0.05 0.04 - 0.036 0.06 0.05 Cov k , k n -1 k - k k - k Cov k , k S m n i 1 2 2 ,i 1 1 ,i 1 2 = = + + + + = + + + + = + − − + − − + − + − = = =