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Basic Question 6 of 23
If the standard deviation of stock A is 30%, the standard deviation of stock B is 30%, and the correlation between stocks A and B is 0.8, the covariance between stocks A and B is ______.
B. 7.2%
C. 6.42%
A. 9%
B. 7.2%
C. 6.42%
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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 mean, variance, and covariance (or correlation) of asset returns based on historical data
calculate and interpret portfolio standard deviation
describe the effect on a portfolio's risk of investing in assets that are less than perfectly correlated
CFA® 2025 Level I Curriculum, Volume 2, Module 1.