A Positive Covariance Between Two Variables Indicates That

question 110

Multiple Choice

A positive covariance between two variables indicates that

• A) the two variables move in different directions.
• B) the two variables move in the same direction.
• C) the two variables are low risk.
• D) the two variables are high risk.
• E) the two variables are risk free.

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Definitions:

Compounded Annually

The process of earning interest on both the initial principal and the accumulated interest from previous periods on a yearly basis.

Future Value

The estimated value of an investment or payment at a specified future date, considering factors like interest rates and time.

Deposit

A sum of money placed into a bank account or handed over as a partial payment or security for the purchase of an item.

Compounded Annually

Refers to the process of earning interest on both the principal and the accumulated interest from previous periods, calculated once per year.