CFA Practice Question

There are 294 practice questions for this study session.

CFA Practice Question

The covariance of historical returns between mutual funds P and Q is 0.0989. Standard deviations for the two return series are 0.34 and 0.48, respectively. The correlation between historical returns for P and Q is ______.

A. 0.1632
B. 1.65
C. 0.606
Correct Answer: C

Correlation = COVP,Q/(σ X2Pσ X2Q) = 0.0989/(0.34 x 0.48) = 0.606

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