Which one of the following statements is TRUE? O a . If the distribution of
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Question:
Which one of the following statements is TRUE?
O a If the distribution of returns for an asset has a variance of zero, then covariance of returns
between that asset and the returns any other asset must equal zero.
O b The covariance allows us to gauge the strength of the relationship between stocks.
O c While the variance and the standard deviation both measure the variability of the returns, the
variance is easier to interpret because it is in the same units as the returns themselves.
O d If two assets with return correlation coefficients less than one make up a portfolio, then the
portfolio does not take advantage of any diversification benefits.
Related Book For
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain
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