The covariance is computed as:
Cov (X, Y) = E(XY) - E(X)E(Y)
We compute the various terms as:
E(XY) = 1*1*0.1 + 1*2*0.1 + 2*1*0.05 + 2*2*0.1 = 0.1 + 0.2 + 0.1 +
0.4 = 0.8
E(X) = 0*0.35 + 1*0.25 + 2*0.4 = 1.05
E(Y) = 0*0.35 + 1*0.25 + 2*0.4 = 1.05
Therefore, the covariance here is computed as:
Cov(X, Y) = 0.8 - 1.05*1.05 = -0.3025
Therefore the required covariance here is - 0.3025
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