The Returns on the Stock of DEF and GHI Companies

question 48

Multiple Choice

The returns on the stock of DEF and GHI companies over a 4 year period are shown below: $$\begin{array} { | l | l | l | } \hline \text { Year } & \text { DEF } & \text { GHI } \\\hline & 8 \% & 11 \% \\\hline & 12 \% & 9 \% \\\hline & - 5 \% & - 9 \% \\\hline & 6 \% & 13 \% \\\hline\end{array}$$ From this limited data you should conclude that returns on

• A) DEF and GHI are negatively correlated.
• B) DEF and GHI are somewhat positively correlated.
• C) DEF and GHI are perfectly positively correlated.
• D) DEF and GHI are uncorrelated.

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Definitions:

Operations

The day-to-day activities involved in running a business, focusing on producing goods and services efficiently and effectively.

Cash Equivalents

Highly liquid investments that are usually reported with cash on the balance sheet.

Statement of Cash Flows

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, divided into operating, investing, and financing activities.

Cash

Coins, currency (paper money), checks, money orders, and money on deposit that is available for unrestricted withdrawal from banks and other financial institutions.