- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 5. Portfolio Mathematics
- Subject 1. Portfolio Expected Value and Variance of Return
CFA Practice Question
Consider the following statements:
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.
B. II is false but IV is true.
C. I and IV are false.
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? |