Security X Has Expected Return of 7% and Standard Deviation

question 6

Multiple Choice

Security X has expected return of 7% and standard deviation of 14%. Security Y has expected return of 11% and standard deviation of 22%. If the two securities have a correlation coefficient of 0.45, what is their
Covariance?

• A) 0.0388
• B) -0.0108
• C) 0.0184
• D) -0.0139
• E) -0.1512

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Definitions:

Need Theories

Psychological theories that focus on the inherent human needs driving behavior and motivation.

Process Theories

Theories that focus on the psychological and behavioral processes that motivate individuals to act in certain ways.

Perceptual Biases

Psychological tendencies that cause the misinterpretation or distortion of a sensory stimulus or judgment.

Selective Perception

The process by which individuals perceive what they want in media messages while ignoring opposing viewpoints.