CFA Practice Question

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CFA Practice Question

Consider the following statements:

I. The covariance matrix is always symmetric with regard to its diagonal.
II. Cov(X,X)2 = Var(X)
III. In general, for n securities, one must determine n(n-1)/2 different variances.
IV. The correlation is unitless.

Which of the following is incorrect?

A. Both II and III are false.
B. II is false but IV is true.
C. I and IV are false.
Correct Answer: C

Statements I and IV are true; statements II and III are false.

User Contributed Comments 19

User Comment
vt96 trick question
roninacolyte very good question
tssverma yes..sometimes it is better to use the elimination process .Like I knew IV is always true and choice C contradicts IV.
sunilcfa Just remembered wat my prof used to tell me.... read the qts properly
surob yeah, tricky one.
Mattik Had it right, but answered wrong....better read the question twice
viannie really sly! especially when it's midnight!
CFAonTheBrain can a question like this be on the exam?
Oarona For sure
dcfa trick question definitely
geofin Most people will know the correct answer but will will choose the wrong answer!!!
gill15 It all makes sense to me except ii.

Cov(X,X) = VarX

How does Cov(X,X)^2 = VarX
gill15 stupid...thats why all the comments were there....
schweitzdm This question is ridiculous.
ashish100 @Viannie its literally midnight right now... weird
ibrahim18 What sort of tricky and counter-intuitive question is this? Are we supposed to answer questions from the reverse?
EEEEvia read question properly will definitely avoid unnecessary mistakes....
kingirm Just wordgames
Freddie33 What does the first one mean?
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