1. If the returns of two stocks vary over time, the amount that they vary in common is measured by their...

a)covariance

b)standard deviation

c)expected return

d)beta

2. Adding a stock to your portfolio which has a negative correlation to your portfolios returns has what effect on the portfolios risk?

a)increase risk

b)decrease risk

c)stays the same

3.When a stock price is rising while the stock market is staying pretty constant, the stock has a...

a)Negative correlation with the market index

b)positive correlation with the market index

c)negative correlation with the market index