We know, | ||||
Let the return of Stock 1 be x and Stock 2 be y | ||||
Covariance= (∑x-Expected return of Stock 1)(y-Expected return of Stock 2))/n | ||||
where, | ||||
n= number of years | ||||
Correlation coefficient= Covariance/(Sd of Stock 1*Sd of Stock 2) | ||||
So, the answer will be all the above. | ||||
The same can be summarised as below: | ||||
Option A= The correl function of excel requires the return of both the stocks as input i.e. Array 1 and Array 2= Hence this option is correct | ||||
Option C= As per the correlation coefficient cited above, this is also correct | ||||
Option D= This option is first calculating covariance and than coefficient of variance, hence the referencing in this case is also true. | ||||
Answer: Option B |
Year 2015 2016 2017 5 Exp Return 6 Std Dev 7 Covariance 8 Correlation Stock 1...