Give an Example of a Pair of Variables Which You

question 29

Essay

Give an example of a pair of variables which you would expect to have a negative linear correlation coefficient and explain why.

---

Definitions:

Dividend Yield

The annual dividend payments to shareholders expressed as a percentage of the stock's current price.

Yield-To-Maturity

The total return anticipated on a bond if it is held until it matures, including all payments from interest and principal, calculated as an annual rate.

Zero-Coupon Bond

A bond that does not pay periodic interest payments and is sold at a discount from its face value. The bond's profit comes from the difference between its purchase price and its face value at maturity.

Yield To Maturity

The total return anticipated on a bond if the bond is held until it matures, including interest payments and the difference between the bond’s purchase price and its face value.