The Covariance Between the Returns of Stock a and Stock

question 6

Multiple Choice

The covariance between the returns of stock A and stock B is -125. The standard deviation of the rates of return is 20 for stock A and 10 for stock B. The correlation coefficient of the rates of return between A and B is closest to ________.

• A) -0.625
• B) -0.375
• C) 0.375
• D) 0.625

Illustrate the benefits of specialization and trade for individuals, states, and countries.

Comprehend the concept of equilibrium in different economic contexts.

Explain the factors leading to gains from trade and how they enhance economic efficiency.

Distinguish between efficient and equitable distributions.

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Definitions:

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time.

Effective Interest Method

The effective interest method is a finance and accounting technique used to allocate loan or bond interest expense over the relevant period based on the loan's book value.

Journal Entry

A record in accounting that represents a transaction and shows the accounts affected and the amounts.

Sale

A transaction between two parties where the buyer receives goods, services, or assets in exchange for money or other forms of compensation.