When the Correlation Between X and Y Equals Zero, the Standard

question 58

Multiple Choice

When the correlation between X and Y equals zero, the standard error of estimate

• A) equals 0
• B) equals the mean of Y
• C) equals the standard deviation of Y
• D) equals 1.00

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Definitions:

Volatility

A statistical measure of the dispersion of returns for a given security or market index, indicating how much the price of a security, derivative, or index fluctuates.

Stock Betas

An index for determining the degree of volatility, or built-in risk, that a security or a portfolio encounters in comparison with the market at large.

Highest Betas

Assets or securities that exhibit the greatest sensitivity to market movements, typically offering higher potential returns, but also higher risk.

Lowest Betas

In finance, refers to the stocks or portfolios with the lowest measures of volatility or market risk in comparison to the market as a whole.