Use the Table for the Question(s)below

question 53

Multiple Choice

Use the table for the question(s) below.
Consider the following returns:

-The covariance between Lowes' and Home Depot's returns is closest to:

• A)0.10
• B)0.29
• C)0.12
• D)0.69
• E)0.41

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Definitions:

Exchange Rates

The value of one currency expressed in terms of another currency, which determines how much foreign currency can be exchanged for a unit of domestic currency.

Gold Convertibility

The ability to convert a currency directly into gold, a system which provides a measure of security and confidence in a currency's value.

Managed Float

A currency exchange rate policy where a country's central bank intervenes occasionally to change the direction or the pace of change of a currency's value, without specific target levels.

Exchange Rate System

The mechanism through which the value of a country's currency is tied to another currency, a basket of other currencies, or as floating, determined by the forex market.