If the standard deviations of Stock A and B are 0.20 and 0.30 respectively and the COV(A,B) equals 0.012, what is the correlation coefficient?
A) 0.00072
B) 0.20
C) 0.30
D) 2

Question

Quizplus · Accepted Answer

The correlation coefficient is calculated as the covariance divided by the product of the standard deviations of the two stocks: COV(A,B) / (SD(A) * SD(B)) = 0.012 / (0.20 * 0.30) = 0.20.

If the Standard Deviations of Stock a and B Are