A Negative Covariance Between the Returns of Stock a and Stock

question 85

Multiple Choice

A negative covariance between the returns of Stock A and Stock B indicates that

• A)market prices of Stock A and Stock B move in tandem when their returns are declining.
• B)the return on one stock will exceed that stock's average return when the second stock has a return that is less than its average.
• C)a portfolio investing equally in Stocks A and B will have a negative expected rate of return.
• D)both Stock A and Stock B have negative rates of return for the period.
• E)one stock has a negative rate of return while the other stock has a positive rate of return for the period.

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Definitions:

Obtainable Goal

A target or objective that is realistically achievable within a given timeframe or with available resources.

Organizational Structure

The system that outlines how certain activities are directed to achieve the goals of an organization, including rules, roles, and responsibilities.

Excess Plant Capacity

A situation where a company's production facilities have more production capabilities than currently needed for its level of production.

Stockholders' Approval

The formal consent given by shareholders, often required for significant company actions like mergers, acquisitions, or changes in corporate structure.