Question

If the rates of return of two securities move together we say their interactive risk or covariance is

Answer 1

Answer:

Positive

Step-by-step explanation:

Covariance is the measure of directional relationship between the rate of returns of two assets.

If the rate of return is opposite to each other then covariance is said to be negative.

If the returns are independent of each other, covariance is close to zero.

And when rates of return move together then covariance or interactive risk is positive.

Hope this answer may help!