- CFA Exams
- CFA Level I Exam
- Study Session 18. Portfolio Management (1)
- Reading 52. Portfolio Risk and Return: Part I
- Subject 5. Portfolio Risk

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**CFA Practice Question**

An analysis of returns from securities P and Q produces a covariance of 0.0494. The correlation between these returns ______

A. equals the covariance multiplied by the product of the standard deviations of P's and Q's returns.

B. equals the covariance divided by the product of the standard deviations of P's and Q's returns.

C. could be positive or negative, depending on the magnitude of the standard deviations of P's and Q's returns.

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**User Contributed Comments**
2

User |
Comment |
---|---|

monteleone |
Can someone please explain this answer for me? |

pochuevalex |
it's just the formula Cor(p,q)=Cov(p,q)/(stand_deviat_p*stand_deviat_q) that's it no tricks! |