Which of the following is true of a covariance matrix?
A. The numbers on the diagonal are variances
B. The numbers on the diagonal are standard deviations
C. The numbers on the diagonal are all one.
D. The numbers on the diagonal are all zero
A
The diagonal numbers are variances. The off-diagonal numbers show the covariance between two variables.
15 . Consider a position in options on a particular stock. The position has a delta of 12 and the stock price is 10 . Which of the following is the approximate relation between the change in the portfolio value in one day, dP, and the return on the stock during the day, dx
A. dP=12dx
B. dP=1.2dx
C. dP=120dx
D. dP=22dx
C
If S is the stock price and the change in the stock price is dS, from the definition of delta we know that dP=12dS. This means that dP=12S(dS/S). dS/S is dx. In this case S=10 so that C is correct.
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Which of the following is not part of the control environment?
a. Management philosophy and operating style. b. Methods of assigning authority and responsibility. c. Personnel policies and practices. d. Control activities.
The management of Plitt Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The company's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 55,000 machine-hours. Capacity is 67,000 machine-hours and the actual level of activity for the year is assumed to be 61,000 machine-hours. All of the manufacturing overhead is fixed and both the estimated amount at the beginning of the year and the actual amount at the end of the year are assumed to be $2,211,000 per year. It is assumed that a number of jobs were worked on during the year, one of which was Job Q20L which
required 410 machine-hours.If the company bases its predetermined overhead rate on capacity, what would be the cost of unused capacity reported on the income statement prepared for internal management purposes? A. $241,200 B. $217,475 C. $396,000 D. $198,000
Selection bias occurs when the respondent decides which of the questions on the survey to answer
Indicate whether the statement is true or false
The methodology of combining forecasts is best described as
A. a moving average. B. a simple average. C. a weighted average. D. a geometric average. E. None of the options are correct.