-What Is the Covariance Between Stock X and the Market

question 91

Multiple Choice

$\begin{array}{c}\begin{array}{c}\underline{\text { Year }} \\1 \\2 \\3 \\4\end{array}\begin{array}{c}\underline{\text {Stock X}}\\-27 \% \\6 \% \\34 \%\\11\%\end{array}\begin{array}{c}\underline{\text { Market } }\\-7 \% \\11 \% \\18 \% \\10\%\end{array}\end{array}$

-What is the covariance between Stock X and the market?

• A) 0.0125
• B) 0.0262
• C) 0.0468
• D) 0.0429
• E) 0.0316

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Definitions:

Interest Payment

The payment made to a lender by a borrower for the privilege of borrowing money, typically expressed as an annual rate.

Zero-Coupon Bond

A Zero-Coupon Bond is a debt security that doesn't pay interest (a coupon) but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value.

Yield To Maturity

The total return anticipated on a bond if it is held until the end of its lifetime.

Face Value

The nominal value printed on a financial instrument such as a bond or stock certificate; it is the amount paid at maturity or when the instrument is issued.