The Correlation Between the Return on a Risk-Free Asset and the Return

question 79

True/False

The correlation between the return on a risk-free asset and the return on any common stock will equal zero.

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Definitions:

Cash Basis

An accounting method where revenues and expenses are recognized when cash is received or paid, as opposed to when they are incurred.

Statement of Cash Flows

A financial statement that provides aggregate data regarding all cash inflows and outflows a company receives from its ongoing operations and external investment sources.

Accrued Expenses

Expenses that have been incurred but not yet paid or recorded by the end of the accounting period.