The Correlation Coefficient Between Two Assets Equals ________

question 81

Multiple Choice

The correlation coefficient between two assets equals ________.

• A) their covariance divided by the product of their variances
• B) the product of their variances divided by their covariance
• C) the sum of their expected returns divided by their covariance
• D) their covariance divided by the product of their standard deviations

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Definitions:

Consideration

Something of value exchanged by the parties involved in a contract, making the agreement legally binding.

Accepted Offer

An offer that has been agreed upon by all parties involved, leading to the formation of a contract.

Preexisting Duty

An obligation that a party is already legally bound to fulfill, which cannot serve as consideration for a new contract.

Bilateral Contract

An agreement between two parties where each promises to perform an act in exchange for the other's performance.