A Scatter Diagram with a Negative-Strong Relationship Means That

question 52

Multiple Choice

A scatter diagram with a negative-strong relationship means that

• A) variable B increases slightly (although not as clearly) as variable A increases.
• B) variable B decreases as variable A increases.
• C) variable B increases as variable A increases.
• D) variable B decreases slightly (although not as clearly) as variable A increases.

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Definitions:

Prudent Investor Rule

Prudent Investor Rule is a legal guideline for fiduciaries that mandates investment strategies should be made as a prudent investor would, considering risk, return, diversification, and the objectives of the trust or beneficiary.

Active Portfolio Management

A strategy where managers make specific investments with the goal of outperforming an investment benchmark index.

Passive Strategy

An investment approach that involves holding a diversified portfolio to match the performance of a market index over time, minimizing buying and selling actions.

After-tax Holding-period Return

The return on an investment after accounting for taxes, over the period it was held, reflecting the true gain or loss.