Read the Workbook Structure and Scenario Data

In the workbook Copy of FINC_6366_Project_2_Covariance_and_Correlation, the main scenario table appears on the Project 2 worksheet. This table is the starting point for all later calculations, so reading it carefully helps you trace every expected return, standard deviation, covariance, and correlation back to the original inputs.

1. Identify the worksheet sections

According to Copy of FINC_6366_Project_2_Covariance_and_Correlation, the worksheet is organized into labeled sections:

• Row 1: Project 2 - Covariance and Correlation
• Row 3: Name
• Rows 7–10: Scenario table with states, probabilities, and stock returns
• Row 14: A) Expected Returns
• Row 21: B) Standard Deviations
• Row 28: C) Portfolio AB
• Row 35: D) Portfolio CD
• Row 42: E) Portfolio EF

For this lesson, the most important part is the scenario table in rows 7 through 10, because those values are the original inputs used by the later worksheet sections.

2. Read the scenario table headers

The scenario table header is in row 7 of Copy of FINC_6366_Project_2_Covariance_and_Correlation. It shows the meaning of each column:

• Column A: State of Economy
• Column B: Probability
• Column C: Return for Stock A
• Column D: Return for Stock B
• Column E: Return for Stock C
• Column F: Return for Stock D
• Column G: Return for Stock E
• Column H: Return for Stock F

This layout means each row below the header gives one economic scenario, its probability, and the return for each stock in that scenario.

3. Identify the three states of the economy

The workbook lists three possible economic states in Copy of FINC_6366_Project_2_Covariance_and_Correlation:

• Growth
• Status Quo
• Recession

These are the only states used in the scenario analysis, so every later result comes from these three rows.

4. Record the probabilities for each state

The probability for each state is shown in column B:

• Growth: 0.25
• Status Quo: 0.50
• Recession: 0.25

These probabilities sum to 1.00, confirming that the table covers the full set of possible economic outcomes in Copy of FINC_6366_Project_2_Covariance_and_Correlation.

5. Record the stock return inputs for Stocks A through F

The stock return inputs are the original scenario-based returns for each stock.

Growth state

• Stock A: 31%
• Stock B: 3%
• Stock C: 15%
• Stock D: 21%
• Stock E: 0%
• Stock F: 18%

Status Quo state

• Stock A: 21%
• Stock B: 1%
• Stock C: 3%
• Stock D: 7%
• Stock E: 4%
• Stock F: 3%

Recession state

• Stock A: 20%
• Stock B: 4%
• Stock C: -5%
• Stock D: -6%
• Stock E: 6%
• Stock F: -4%

6. Organize the scenario data in one view

A simple way to read the source table from Copy of FINC_6366_Project_2_Covariance_and_Correlation is to group each state with its probability and all six stock returns:

• Growth (0.25): A 31%, B 3%, C 15%, D 21%, E 0%, F 18%
• Status Quo (0.50): A 21%, B 1%, C 3%, D 7%, E 4%, F 3%
• Recession (0.25): A 20%, B 4%, C -5%, D -6%, E 6%, F -4%

This is the core scenario dataset for the workbook.

7. Connect the scenario table to later worksheet outputs

After the scenario table, the workbook shows later result sections such as A) Expected Returns and B) Standard Deviations in Copy of FINC_6366_Project_2_Covariance_and_Correlation. Those later sections are based on the scenario returns and probabilities listed in rows 8 through 10.

• Expected returns come from combining each stock’s three scenario returns with the three probabilities.
• Standard deviations come from measuring how much each stock’s scenario returns vary around its expected return.
• Portfolio sections such as AB, CD, and EF build on the same return inputs when calculating covariance, correlation, portfolio expected return, and portfolio risk.

So if you want to verify any later answer, start by returning to the scenario table in rows 7 to 10.

8. Key takeaway

In Copy of FINC_6366_Project_2_Covariance_and_Correlation, the foundation of the workbook is the Project 2 worksheet’s scenario table:

• Three states of the economy: Growth, Status Quo, Recession
• Probabilities: 0.25, 0.50, 0.25
• Scenario returns for Stocks A through F listed across columns C through H

Once you can read that table accurately, you can trace every later workbook output back to its original source data.