A Security Has a Zero Covariance with the Market

question 57

Multiple Choice

A security has a zero covariance with the market. This means that:

• A)the return on the security is always equal to that of the market.
• B)the return on the security moves in the same direction as the market return.
• C)the security is a risk-free security.
• D)there is no identifiable relationship between the return on the security and that of the market.
• E)the return on the security must vary more than that of the market.

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Definitions:

Free Association

A psychoanalytic process in which a patient says whatever comes to mind without censorship, used to explore the unconscious.

Insight

The capacity to gain an accurate and deep intuitive understanding of a person or thing, often resulting in the abrupt resolution of a problem.

Resistance

The act of opposing or fighting against something, which can be physical, psychological, or symbolic in nature.

Psychoanalytic Interpretation

An approach in psychology that seeks to understand the underlying psychological meanings and motivations behind behaviors and thoughts.