Which of These Statistics Best Describes the Relationship in This

question 101

Multiple Choice

Which of these statistics best describes the relationship in this scatterplot?

• A) r = .00
• B) r = .40
• C) r = -1.00
• D) r = -.50

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Definitions:

Systematic Risk

Refers to the risk inherent to the entire market or market segment that cannot be mitigated through diversification.

Unsystematic Risk

The danger linked to a particular corporation or sector that can be minimized by spreading investments.

Systematic Risk

The inherent risk associated with the entire market or market segment, also known as market risk.

Beta Coefficient

A means of gauging the rate of fluctuation, or uniform risk, inherent in a security or portfolio as compared to the entire market.