Suppose That There Is a Perfect Negative Correlation Between the Amount

question 178

Multiple Choice

Suppose that there is a perfect negative correlation between the amount of money that Jane spends and the amount of money that she has in her bank account: for every rand that she spends, she has exactly one less rand in her rand account (assuming no interest, fees, or credits) .Thus the correlation between Jane's spending and savings can be represented as ____.

• A)r = -100
• B)r = -1.00
• C)r = 0.00
• D)r = 100

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Definitions:

Beta

An indicator of how much a stock's price movement varies compared to the general market, signifying its relative risk to the market norm.

Expected Return

A statistical measure of the mean or average return from an investment, considering historical or anticipated performance, often used in financial analysis.

Market Return

The total return of an investment market, comprising both capital gains and dividends or interest, over a given period.

Risk-Free Rate

The theoretical return on an investment with no risk of financial loss, typically represented by the yield on government bonds.