Security X Has Expected Return of 9% and Standard Deviation

question 43

Multiple Choice

Security X has expected return of 9% and standard deviation of 18%. Security Y has expected return of 12% and standard deviation of 21%. If the two securities have a correlation coefficient of 0.4, what is their
Covariance?

• A) 0.0388
• B) 0.0706
• C) 0.0184
• D) -0.0133
• E) -0.0151

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Definitions:

Amplifies Signal

A process or device that increases the power, voltage, or current of a signal.

Derivative Action

In control systems, a feedback mechanism that is proportional to the rate of change of the error signal, used to predict and stabilize future system behavior.

Error Signal

A signal proportional to the difference between the actual output and the desired output.

Fuzzy Logic PID Controller

A Fuzzy Logic PID Controller is a control system that combines fuzzy logic with the traditional Proportional-Integral-Derivative (PID) control strategy to manage complex dynamic systems.