Stock P and Stock Q Have Had Annual Returns of -10

question 25

Multiple Choice

Stock P and Stock Q have had annual returns of -10 percent, 12 percent, 28 percent; and 8 percent, 13 percent, 24 percent, respectively. Calculate the covariance of return between the securities. (Ignore the correction for the loss of a degree of freedom set out in the text.)

• A)-149.00
• B)+149.00
• C)+99.33
• D)-100.00

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Definitions:

Variable Costing

A costing method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in unit product costs.

Income From Operations

Earnings derived from a company's regular business activities, excluding revenues and expenses from non-operating activities.

Break-Even Point

The level of production or sales at which revenues equal expenses, resulting in zero profit or loss.

Operating Income

Earnings before interest and taxes, presenting a company's profit from regular operational activities.