The Standard Deviation of Return on Investment a Is 10

question 78

Multiple Choice

The standard deviation of return on investment A is 10%, while the standard deviation of return on investment B is 5%. If the covariance of returns on A and B is .0030, the correlation coefficient between the returns on A and B is ________.

• A) .12
• B) .36
• C) .60
• D) .77

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Definitions:

Agricultural Futures

Contracts to buy or sell agricultural commodities at a predetermined price at a specified time in the future, used for hedging or speculating on the price movement of these commodities.

Actively Traded

Describes securities or assets that are frequently bought and sold, indicating high trading volume.

Orange Juice

A commodity traded on futures markets, representing frozen concentrated orange juice.

Futures Contracts

Legal agreements to buy or sell a particular commodity or financial instrument at a predetermined price at a specified time in the future.