Security M Has Expected Return of 17% and Standard Deviation

question 59

Multiple Choice

Security M has expected return of 17% and standard deviation of 32%.Security S has expected return of 13% and standard deviation of 19%.If the two securities have a correlation coefficient of 0.78, what is their covariance?

• A)0.038
• B)0.049
• C)0.047
• D)0.045

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Definitions:

Manipulation Check

A procedure to determine if the experimental manipulation of the independent variable has the intended effect on the participants.

Independent Variable

The variable that is manipulated to observe its effect on the dependent variable.

Ceiling Effect

A limitation in data measurement where higher values become indistinguishable due to the upper limit of the scale being reached.

Confounding

An uncontrolled variable varies systematically with an independent variable; it is impossible to separate the effect of the independent variable from the confounding variable.