A Correlation of

question 45

Multiple Choice

A correlation of .98 between X and Y would indicate a:

• A) virtually no relationship between X and Y.
• B) a causal relationship, where X causes Y.
• C) weak positive relationship between X and Y.
• D) strong positive relationship between X and Y.

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Definitions:

Interest Rate Risk Premiums

Additional returns demanded by investors to compensate for the risk of fluctuating interest rates.

D Credit Rating

A rating indicating that an entity is in default, having failed to fulfill its credit obligations, the lowest possible rating in assessments of credit risk.

Credit Rating

A formal assessment of an entity's ability to repay its debts, often in the form of a letter grade.

Term Structure

The relationship between interest rates or yields and different maturities for debt securities, often depicted as a yield curve.