Covariances Between Security Returns Tend to Be

question 9

Multiple Choice

Covariances between security returns tend to be

• A) positive because of SEC regulations.
• B) positive because of Exchange regulations.
• C) positive because of economic forces that affect many firms.
• D) negative because of SEC regulations.
• E) negative because of economic forces that affect many firms.

---

Definitions:

FIFO Costing

FIFO Costing, or First-In, First-Out costing, is an inventory valuation method where goods first purchased or produced are the first ones sold.

Pretax Income

The amount of income earned by a business before taxes have been deducted, also known as earnings before taxes (EBT).

Inventory Amounts

The price of items that are up for sale at the termination of a bookkeeping period.

Audit

An examination of the financial reports to ensure that they represent what they claim and conform with generally accepted accounting principles.