If the Correlation Between Two Stocks Is -1, the Returns

question 35

Multiple Choice

If the correlation between two stocks is -1, the returns:

• A) generally move in the same direction.
• B) move perfectly opposite one another.
• C) are unrelated to one another as it is <0.
• D) have standard deviations of equal size but opposite signs.

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Definitions:

Gustatory Cortex

A region of the brain responsible for the perception of taste.

Genetic Predisposition

An inherited tendency to develop certain traits, conditions, or diseases.

Self-Perception Theory

A psychological theory suggesting people deduce their attitudes and feelings from observing their own behavior and the situations in which this behavior occurs.

Hypothalamus

A region of the brain responsible for the production of hormones that regulate body temperature, hunger, moods, release of hormones from many glands, especially the pituitary gland, sleep, and sex drive.