-The Correlation of Returns Between Asset a and Asset B

question 31

Multiple Choice

$$\begin{array}{l}\text { Expected Return (\%) }\\\begin{array} { c c c c } \text { Year } & \text { Asset A } & \text { Asset B } & \text { Asset C } \\\hline 1 & 6 & 8 & 6 \\2 & 7 & 7 & 7 \\3 & 8 & 6 & 8\end{array}\end{array}$$
-The correlation of returns between Asset A and Asset B can be characterized as (See Figure 7.1)

• A) perfectly negatively correlated.
• B) uncorrelated.
• C) perfectly positively correlated.
• D) cannot be determined.

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Definitions:

Employ More Labor

The process of hiring additional personnel to increase the output or productivity of a business.

Employ More Capital

The process of investing additional funds or resources into a business to increase its capacity or efficiency.

Marginal Product

The boost in production resulting from one more unit of input.

Total Product Curve

A graphical representation showing how the total quantity of output produced by a firm varies with the quantity of a variable input, keeping all other inputs constant.