What Is the Covariance of Security a to the Market

question 47

Multiple Choice

What is the covariance of Security A to the market given the following information?
$$\begin{array} { c c c } \text { Year } & \text { Security A Returns } & \text { Market Returns } \\1 & 1\% & - 6\% \\2 & 9 & 14 \\3 & - 2 & 7 \\4 & 18 & 12\end{array}$$

• A)23.14
• B)29.88
• C)48.83
• D)99.18
• E)114.01

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Definitions:

Behavioral Economics

A subset of economics that analyzes how psychological, social, cognitive, and emotional factors influence economic decisions of individuals and institutions.

Neoclassical Economists

Economists specializing in examining the allocation of goods, outputs, and how income is distributed within markets, driven by the dynamics of supply and demand.

Simplifying Assumptions

Theoretical conditions applied to models to make them more manageable and easier to understand, often by ignoring real-world complexity.

Hedonic Treadmill

The theory that individuals remain at a relatively stable level of happiness despite changes in their lives, such as increases in income or consumption.