If Two Variables Were Perfectly Correlated, the Correlation Coefficient R

question 108

Multiple Choice

If two variables were perfectly correlated, the correlation coefficient r would equal

• A) 0.
• B) -1.
• C) 1.
• D) 1 or -1.
• E) -2.

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Definitions:

Total Return

The complete return on an investment over a specified period, including both capital gains and income received.

Dividend

A portion of a company's earnings that is paid to shareholders or owners as a distribution of profits.

Capital Gains Rate

The tax rate applied to the profit made from selling an asset at a higher price than its purchase price.

Insider Trading

The trading of a public company's stock or other securities by individuals with access to nonpublic, material information about the company.