In Words, the Covariance Considers the Probability of Each Scenario

question 63

Multiple Choice

In words, the covariance considers the probability of each scenario happening and the interaction between

• A) securities' returns relative to their variances.
• B) securities' returns relative to their mean returns.
• C) securities' returns relative to other securities' returns.
• D) the level of return a security has in that scenario and the overall portfolio return.
• E) the variance of the security's return in that scenario and the overall portfolio variance.

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Definitions:

Positive Expectations

The anticipation or belief that favorable results or outcomes will occur in the future.

Compatibility

The ability of two or more systems, components, or factors to work together in harmony without conflict.

Restoring Credibility

Restoring credibility involves actions taken to rebuild trust and reliability after they have been damaged by previous actions or misinformation.

Distributive Justice

The perceived fairness of the allocation of resources or outcomes among members of a group or organization.