In Words, the Covariance Considers the Probability of Each Scenario

question 61

Multiple Choice

In words, the covariance considers the probability of each scenario happening and the interaction between

• A)securities' returns relative to their variances.
• B)securities' returns relative to their mean returns.
• C)securities' returns relative to other securities' returns.
• D)the level of return a security has in that scenario and the overall portfolio return.

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Definitions:

Market Price

The open market's rate for an asset or service at the current moment.

Coupon Rate

The interest rate on a bond or fixed-income security, representing the annual interest payment compared to its face value.

Yield To Maturity

The total return anticipated on a bond if it is held until the date of its maturity, accounting for all payments from the bond over its remaining life.

Present Value

The current value of a future amount of money or stream of cash flows, discounted at a specific interest rate.