Which of the Following Is a FALSE Statement of the Correlation

question 85

Multiple Choice

Which of the following is a FALSE statement of the correlation coefficient?

• A)It measures how security returns move in relation to one another.
• B)Positive correlation coefficients imply that the returns on Security A tend to move in the same direction as those on security B.
• C)Negative correlation coefficients imply that the returns on Security A tend to move in the opposite direction to those on security B.
• D)The closer the absolute value of the correlation coefficient is to one, the weaker the relationship between the returns on the two securities.

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