If Covariance Between Two Variables Is near 0, It Implies

question 40

Multiple Choice

If covariance between two variables is near 0, it implies that

• A)a positive relationship exists between the variables.
• B)the variables are not linearly related.
• C)the variables are negatively related.
• D)the variables are strongly related.

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Definitions:

Public Company Accounting Oversight Board (PCAOB)

A nonprofit corporation established by Congress to oversee the audits of public companies in order to protect the interests of investors.

Investment Company Act of 1940

A law that regulates investment companies and the activities they engage in, including mutual funds, to protect the interests of investors.

Mutual Funds

Investment programs funded by shareholders that trade in diversified holdings and are professionally managed.