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:

Serious Head Injuries

Severe trauma or damage to the skull or brain, often requiring immediate medical attention to prevent long-term consequences.

Car Accident

An unexpected and unintentional road incident involving one or more vehicles, often resulting in damage or injury.

Rash Driving

Reckless or careless driving behavior that significantly increases the risk of accidents or injuries.

Contract

An agreement between two or more parties that is recognized and enforceable by legal means.