While Stock A has a standard deviation of 37 percent, Stock B has a standard deviation of 46 percent. If the correlation between the stocks is 0.1528, what is the covariance?
A) 0.1702
B) 0.0260
C) 0.2875
D) 0.1270
E) 0.0565

Question

Quizplus · Accepted Answer

Covariance is calculated using the formula: Covariance = Correlation * Standard Deviation of Stock A * Standard Deviation of Stock B. Therefore, Covariance = 0.1528 * 0.37 * 0.46 = 0.0260.

While Stock a Has a Standard Deviation of 37 Percent