Which of the Following Statements Regarding Covariance Is Correct

question 344

Multiple Choice

Which of the following statements regarding covariance is correct?

• A) Covariance always lies in the range -1 to +1
• B) Covariance, because it involves a squared value, must always be a positive number (or zero)
• C) Low co-variances among returns for different securities leads to high portfolio risk
• D) Co-variances can take on positive, negative, or zero values

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