What Does the Covariance Measure

question 104

Multiple Choice

What does the covariance measure?

• A) The direction of a linear relationship between two variables.
• B) The direction of a curvilinear relationship between two variables.
• C) The direction of a linear relationship between two or more variables.
• D) The direction of a curvilinear relationship between two or more variables.

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Definitions:

Cost of Preferred Stock

The required rate of return for a firm's preferred stock, considering dividend payouts and the stock's price.

Annual Dividend

The total amount of dividend payments a shareholder receives from a stock or investment in a year.

Market Price

An indication of how much a particular good, security, or commodity is valued in a marketplace at any given time.

Cost of Equity

The return that investors expect for their investment in a company's equity, representing the compensation for the risk taken.