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The Variance of the Sum of Two Investments Will Be

question 167

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The variance of the sum of two investments will be equal to the sum of the variances of the two investments plus twice the covariance between the investments.


Definitions:

Price Ceiling

A maximum legal price that can be charged for a good or service, aimed at preventing prices from becoming too high.

Equilibrium Price

The market price at which the quantity of a good demanded equals the quantity supplied, leading to no excess supply or shortage.

Abolished

Refers to formally putting an end to a system, practice, or institution.

Government Involvement

Refers to the activities and interventions by the government in the market to regulate or support economic operations and social policies.

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