- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 3. Probability Concepts
- Subject 7. Expected Value, Variance, Standard Deviation, Covariances, and Correlations of Portfolio Returns
CFA Practice Question
The correlation between two random variables is their covariance standardized by the product of the variables' ______.
A. standard deviations
B. variances
C. coefficients of variation
Explanation: The correlation between two random variables is equal to the covariance between the variables divided by the product of the variables' standard deviations.
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