- CFA Exams
- CFA Level I Exam
- Topic 9. Portfolio Management
- Learning Module 1. Portfolio Risk and Return: Part I
- Subject 4. Portfolio Risk, Return and Diversification
CFA Practice Question
If the covariance of Stock A with Stock B is -100, what is the covariance of Stock B with Stock A?
B. -100
C. 1/100
A. +100
B. -100
C. 1/100
Correct Answer: B
User Contributed Comments 4
| User | Comment |
|---|---|
| Bibhu | By definition, covariance is the variance of A and B together. So if covariance of A to B is -100, so would be from B to A i.e. -100. |
| aniketcpp | can covariance be negative? A negative covariance means returns move inversely. When one variable's value goes up, the other's tends to go down |
| jonan203 | don't confuse covariance with correlation. |
| Rachelle3 | think of covariance as a box if you see it like this you will get it: {box 1 by box 1}. think of microsoft excel spreadsheets or the old fashioned multiplication we had to use in learning multiplication at school |