The Major Difference Between the Correlation Coefficient and the Covariance

question 49

Multiple Choice

The major difference between the correlation coefficient and the covariance is that the correlation coefficient:

• A)can be positive,negative,or zero,whereas the covariance is always positive.
• B)measures the relationship between securities,whereas the covariance measures the relationship between a security and the market.
• C)is a relative measure showing association between security returns,whereas the covariance is an absolute measure showing association between security returns.
• D)is a geometric measure,and the covariance is a statistical measure.

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Definitions:

Apparent Authority

A situation in which a reasonable person would understand that an agent had the authority to act, even if the agent didn't have such authority.

Express Agency

An agency relationship formed by explicit oral or written agreement between the agent and the principal.

Implied Agency

A situation where an agency relationship is inferred from the actions of the parties rather than an explicit agreement.

Constructive Trust

A legal remedy imposed by a court to rectify situations where someone wrongfully holds property they should not benefit from.