What relationship are the volatilities of stock A and B exhibiting?
A) Positive correlation.
B) Negative correlation
C) No correlation
D) Unsystematic correlation.
E) Systematic correlation.

Question

What relationship are the volatilities of stock A and B exhibiting? 
A) Positive correlation. 
B) Negative correlation 
C) No correlation 
D) Unsystematic correlation. 
E) Systematic correlation.

Quizplus · Accepted Answer

The question is asking about the relationship between the volatilities of two stocks, A and B. Volatility is a measure of how much a stock’s price fluctuates, so the question is asking about the relationship between how much stock A’s price fluctuates compared to how much stock B’s price fluctuates. A negative correlation means that when one stock’s volatility goes up, the other stock’s volatility goes down. Therefore, the best choice is B, negative correlation.

What Relationship Are the Volatilities of Stock a and B