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Basic Question 1 of 6
Consider the following statements:
II. Cov(X,X)2 = Var(X)
III. In general, for n securities, one must determine n(n-1)/2 different variances.
IV. The correlation is unitless.
B. II is false but IV is true.
C. I and IV are false.
I. The covariance matrix is always symmetric with regard to its diagonal.
II. Cov(X,X)2 = Var(X)
III. In general, for n securities, one must determine n(n-1)/2 different variances.
IV. The correlation is unitless.
Which of the following is incorrect?
A. Both II and III are false.
B. II is false but IV is true.
C. I and IV are false.
User Contributed Comments 19
| User | Comment |
|---|---|
| vt96 | trick question |
| roninacolyte | very good question |
| tssverma | yes..sometimes it is better to use the elimination process .Like I knew IV is always true and choice C contradicts IV. |
| sunilcfa | Just remembered wat my prof used to tell me.... read the qts properly |
| surob | yeah, tricky one. |
| Mattik | Had it right, but answered wrong....better read the question twice |
| viannie | really sly! especially when it's midnight! |
| CFAonTheBrain | can a question like this be on the exam? |
| Oarona | For sure |
| dcfa | trick question definitely |
| geofin | Most people will know the correct answer but will will choose the wrong answer!!! |
| gill15 | It all makes sense to me except ii. Cov(X,X) = VarX How does Cov(X,X)^2 = VarX |
| gill15 | stupid...thats why all the comments were there.... |
| schweitzdm | This question is ridiculous. |
| ashish100 | @Viannie its literally midnight right now... weird |
| ibrahim18 | What sort of tricky and counter-intuitive question is this? Are we supposed to answer questions from the reverse? |
| EEEEvia | read question properly will definitely avoid unnecessary mistakes.... |
| kingirm | Just wordgames |
| Freddie33 | What does the first one mean? |
I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz
Learning Outcome Statements
calculate and interpret the expected value, variance, standard deviation, covariances, and correlations of portfolio returns
CFA® 2025 Level I Curriculum, Volume 1, Module 5.