Security M Has Expected Return of 17% and Standard Deviation

question 60

Multiple Choice

Security M has expected return of 17% and standard deviation of 32%.Security S has expected return of 13% and standard deviation of 19%.If the two securities have a correlation coefficient of 0.78, what is their covariance

• A)0.038
• B)0.049
• C)0.047
• D)0.045
• E)0.054

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Definitions:

Weighted Average Method

An inventory costing method that assigns a cost to inventory items based on the weighted average cost of all similar items purchased or produced during a period.

Inventory Items

Goods or materials that a company holds for the ultimate goal of resale or production.

Costing Method

An accounting approach to evaluate and determine the cost of goods sold and ending inventory.

Balance Sheet

A financial statement that presents a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of its financial condition.