What Does a Correlation Coefficient near +1 Mean

question 26

Multiple Choice

What does a correlation coefficient near +1 mean?

• A)Two variables are moving in the opposite direction.
• B)Two variables are moving in the same direction.
• C)Two variables are unrelated.
• D)One variable is not a good predictor of the other.

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Definitions:

Derivative

A financial instrument whose value is based on or derived from one or more underlying assets.

Asset Account

An account on a company's balance sheet that represents a resource with economic value owned or controlled as a result of past transactions.

Liability Account

A Liability Account represents a company's financial obligations or debts that arise during the course of business operations.

Fair Market Value

The estimated price at which an asset would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell.