If the Returns of Two Firms Are Negatively Correlated, Then

question 29

True/False

If the returns of two firms are negatively correlated, then one of them must have a negative beta.

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Definitions:

Debt/Assets Ratio

A financial ratio that indicates the proportion of a company's assets that are financed by debt.

Common Equity

The amount of ownership interest that is common stockholders have in a company, reflecting their equity stake.

Borrow

The act of receiving funds from a lender with the agreement to return the principal amount along with interest or other charges, if applicable.

Assets

Economic resources owned or controlled by a person or entity that are expected to produce value or benefit in the future.