Assume a Portfolio Is Comprised of Two Securities,A and B,whose

question 25

Multiple Choice

Assume a portfolio is comprised of two securities,A and B,whose standard deviations are 0.0412 and 0.0721,respectively.If their covariance is 0.002,what is their coefficient of correlation?

• A)0.005
• B)0.115
• C)0.673
• D)1.485

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Definitions:

Heuristic Device

A method or tool used to simplify complex decision-making processes or problem-solving activities.

Concepts

Broad concepts or perceptions that enable the categorization of items, occurrences, characteristics, or concepts that share certain similarities.

Mental Categories

Cognitive groupings of objects, events, or people based on shared properties or characteristics, facilitating understanding and organization of the world.

Common Characteristics

Traits or features that are shared among members of a group, category, or classification.