What is the covariance of Security A to the market given the following information?
$\begin{array}{ccc}
\text { Year } & \text { Security A Returna } & \text { Market Returns } \
1 & 18 \% & 10\% \
2 & -6 & -2\
3&9&7
\end{array}$

A)75.0
B)80.1
C)83.8
D)87.0
E)91.1

Question

What is the covariance of Security A to the market given the following information?
$\begin{array}{ccc}
\text { Year } & \text { Security A Returna } & \text { Market Returns } \
1 & 18 \% & 10\% \
2 & -6 & -2\
3&9&7
\end{array}$

A)75.0
B)80.1
C)83.8
D)87.0
E)91.1

Quizplus · Accepted Answer

Covariance is calculated by taking the average of the product of the deviations of each pair of returns from their respective means. The covariance of Security A to the market is 75.0.