Security X Has Expected Return of 12% and Standard Deviation

question 43

Multiple Choice

Security X has expected return of 12% and standard deviation of 18%. Security Y has expected return of 15% and standard deviation of 26%. If the two securities have a correlation coefficient of 0.7, what is their covariance?

• A) 0.038
• B) 0.070
• C) 0.018
• D) 0.033
• E) 0.054

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Definitions:

Total Allowable Catch (TAC)

A fishery management tool that sets a cap on the total amount of a particular fish species that can be caught over a specified period.

Sustainable Levels

Levels of production, consumption, and behavior that meet current needs without compromising the ability of future generations to meet their own needs.

Individual Transferable Quota (ITQ)

A fisheries management tool that allocates a certain quantity of fish that can be caught by individuals or companies.

Market Price

The present cost at which an item or service may be purchased or sold within a specific market.