-A Risky Security Has a Variance of 0

question 101

Multiple Choice

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

-A risky security has a variance of 0.034596 and a covariance with the market of 0.0216. The variance of the market is 0.023716. What is the correlation of this risky security to the market?

• A) 0.47
• B) 0.96
• C) 0.75
• D) 0.37
• E) 0.58

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Definitions:

Auto Manufacturer

A company that specializes in producing and selling automobiles.

Various Stages Of Production

Different phases in the manufacturing process through which a product goes, from raw materials to the final product.

Work In Process

This refers to the portion of inventory that is currently in the process of being produced but is not yet completed.

Work in Progress

Inventory that has begun the manufacturing process but is not yet completed.