It Is Possible to Have Both a High Correlation Coefficient

question 12

True/False

It is possible to have both a high correlation coefficient and a low regression coefficient.

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Definitions:

Bond Discount

The gap between the nominal value of a bond and the price it fetches on the market when it is sold for an amount lower than its nominal value.

Straight-Line Amortization

A method of systematically reducing the cost value of an intangible asset over its useful life by charging equal expense amounts to each accounting period.

Effective-Interest Method

A method of calculating the interest expense on a bond or loan by applying the constant interest rate to the outstanding balance of the debt for each period.

Bond Discount

The discrepancy between a bond's nominal value and its market price when it is traded at a price below its nominal value.