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.

Question

Quizplus · Accepted Answer

A positive covariance between two variables means that as one variable increases, the other variable tends to increase as well. This suggests that the variables move in the same direction. Therefore, the correct choice is B.

A Positive Covariance Between Two Variables Indicates That