A Negative Covariance Between the Returns of Stock a and Stock

question 49

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:

Managerial Role

The specific duties and responsibilities assigned to managers, including planning, organizing, leading, and controlling an organization's resources.

Entrepreneur

A person who organizes, manages, and assumes the risks of a business or enterprise, often seen as an innovator or source of new ideas.

Resource Allocator

A role typically assumed by managers or leaders, involving the responsibility of distributing and managing resources within an organization efficiently.

Contingency Approach

The Contingency Approach refers to a management theory that suggests the best way to manage an organization depends on, and is contingent upon, the internal and external situation.