The Standard Deviation of Return on Investment a Is

question 1

Multiple Choice

The standard deviation of return on investment A is .10 while the standard deviation of return on investment B is .05.If the covariance of returns on A and B is .0030,the correlation coefficient between the returns on A and B is _________.

• A) .12
• B) .36
• C) .60
• D) .77

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Definitions:

Income Statement

A document detailing a business's income, expenditures, and earnings during a designated timeframe.

Solvency

The ability of a company or individual to meet its long-term financial obligations and continue operating in the long term.

Price-Earnings Ratio

A valuation metric for companies, calculated by dividing a company's share price by its earnings per share.

Earnings

The amount by which revenues exceed expenses.