What is up with this question??? International securities in a portfolio… Morgan states “improved covariance relations across the portfolio’s exposure resulting in greater diversification benefits” I put b) incorrect, because covariance relations are not improved Answer: a) he’s correct Is “improved covariance relations” suppose to = Low correlation
Guess I’m not getting an answer on this one
I woudl assume that a Lower Covariance = Improved Covariance relation = Lower Correlation If we consider Correlation = Covariance (i,m)/Variance (m) then the lower the Covariance the lower the correlation
I can totally see UAECFA’s point. I got this one wrong too. The underlying concept is simple, however, poorly worded.
Thanks bigwilly, I thought this question was one of those CFAI tricks. Was curious if anyone else got tripped up on this play on words.
notice how they said IMPROVED not INCREASED. As i said CFAI test is more like GMAT then a test to test conceptual stuff
comp_sci_kid Wrote: ------------------------------------------------------- > notice how they said IMPROVED not INCREASED. > > As i said CFAI test is more like GMAT then a test > to test conceptual stuff Exactly, I was so pissed when I saw the answer to this. Damn you people from Charlotteville, WV!