If the Covariance Between Two Investments of a Portfolio Is

question 246

True/False

If the covariance between two investments of a portfolio is zero,the variance of the portfolio will be equal to the sum of the variances of the investments.

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Definitions:

Oil Future Contract

A legal agreement to buy or sell a specific amount of crude oil at a predetermined price at a specified time in the future.

Spot Price

The existing cost at which an asset is available for immediate purchase or sale.

Profit/Loss

The financial result of business operations or investment activities, calculated as the difference between revenues and the costs associated with generating those revenues.

Contract Size

The deliverable quantity of commodities or financial instruments specified in a contract that an investor agrees to buy or sell.