A Correlation Coefficient near +1 Means That Two Variables Are

question 70

Short Answer

A correlation coefficient near +1 means that two variables are moving in the _________ direction.

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Definitions:

Warrant

A financial instrument that gives the holder the right, but not the obligation, to buy a company's stock at a predetermined price before a specified date.

Trading

The act of buying, selling, or exchanging financial instruments, such as stocks, bonds, or derivatives, typically in financial markets.

Zero Correlation

A statistical term indicating no linear relationship between two variables, meaning one variable does not predict the movement of the other.

Equity Tranche

The portion of a structured finance instrument that is first to absorb losses and last to receive payments.