Question 36 (2 points)

Security X has an expected return of 7% and standard deviation of 14%. Security Y has an expected return of 11% and standard deviation of 25%. If the two securities have a correlation coefficient of -0.45, what is their covariance?

Question 36 options:

0.0184

0.0388

-0.0139

-0.01575

Question 37 (2 points)

Consider two perfectly negatively correlated risky securities, K and L. K has an expected rate of return of 12% and a standard deviation of 17%. L has an expected rate of return of 9% and a standard deviation of 11%. The risk-free portfolio that can be formed with the two securities will earn _____ rate of return.

Question 37 options:

9.5%

10.9%

10.18%

9.9%