- CFA Exams
- CFA Level I Exam
- Study Session 2. Quantitative Methods (1)
- Reading 8. Probability Concepts
- Subject 7. Covariance and Correlation

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**CFA Practice Question**

Covariance of returns is zero ______

A. when the return on one asset is below its expected value and the return on the other asset is also below its expected value.

B. if returns on the assets are unrelated.

C. when the co-movement between random variables is linear.

**Explanation:**Covariance of returns is zero if returns on the assets are unrelated.

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**User Contributed Comments**
1

User |
Comment |
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mc25456 |
covariance of return is zero if returns on the assets are unrelated. |