Correlation Is The

question 36

Multiple Choice

Correlation is the:

• A)squared measure of a security's total risk.
• B)extent to which the returns on two assets move together.
• C)measurement of the systematic risk contained in an asset.
• D)daily return on an asset compared to its previous daily return.
• E)spreading of an investment across a number of assets.

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Definitions:

Contribution Margin Ratio

A financial metric that measures how much of a company's revenue is available to cover its variable costs and contribute to its fixed costs.

Margin of Safety Ratio

A financial ratio that measures the difference between actual sales and break-even sales, used to assess a company's financial risk.

Break-even Point

The point at which total costs and total revenue are equal, meaning there is no net loss or gain, and the business is not making a profit.

Actual Sales

This refers to the actual revenue generated from the sale of products or services, as opposed to projected sales or forecasts.