I the Purpose of Correlation Analysis Is to Find How

question 101

Multiple Choice

i. The purpose of correlation analysis is to find how strong the relationship is between two variables.
ii. A coefficient of correlation of -0.96 indicates a very weak negative correlation.
iii. The standard error of estimate measures the accuracy of our prediction.

• A) (i), (ii) and (iii) are all correct statements
• B) (i) and (ii) are correct statements, but not (iii).
• C) (i) and (iii) are correct statements but not (ii).
• D) (ii) and (iii) are correct statements but not (i).
• E) All statements are false

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Definitions:

Predictable

Something that can be anticipated or expected based on certain indicators or patterns.

Rate Of Return

The gain or loss of an investment over a specified period, expressed as a percentage of the investment’s initial cost.

Efficient Markets

A concept in financial economics that states that asset prices fully reflect all available information at any point in time.

Expected Return

The probable return on an investment, considering all potential outcomes and their likelihoods.