A Correlation Coefficient Represents Two Things: __________ and __________

question 229

Multiple Choice

A correlation coefficient represents two things: __________ and __________.

• A) a representative sample; strength
• B) strength; direction of the relationship
• C) the experimental group; control group
• D) direction of the relationship; expectant functionality

Apply the normal approximation to the binomial distribution in hypothesis testing.

Understand the conditions for using z-tests in hypothesis testing and confidence interval estimation.

Determine the appropriate sample size for estimating population proportions.

Understand the Central Limit Theorem and its implications for the distributions of sample means and differences between two sample means.

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Definitions:

Unique Risk

Risk that affects a very limited number of assets, often referred to as "unsystematic risk" or "idiosyncratic risk."

Diversifiable Risk

The portion of an investment's risk that can be mitigated or eliminated through portfolio diversification.

Correlation Coefficient

A statistical measure that calculates the strength and direction of a linear relationship between two variables.

Covariance

A measure of how two variables move in relation to each other, used in finance to diversify portfolios and minimize risk.