Which of the Following Would Indicate the Weakest Relationship and Thus

question 154

Multiple Choice

Which of the following would indicate the weakest relationship and thus be close to complete randomness?

• A) +0.01
• B) +1.04
• C) −0.89
• D) −0.98

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Definitions:

Financial Leverage

Financial leverage is the use of borrowed funds to increase an investment's potential return, which also increases the risk of loss.

Dividend Discount Model

A method of valuing a company's stock price by using predicted dividends and discounting them back to present value.

Myron Gordon

An economist best known for developing the Gordon Growth Model, which is used to determine the intrinsic value of a stock based on a future series of dividends that grow at a constant rate.

Burton Malkiel

An American economist and writer, most famous for his classic finance book "A Random Walk Down Wall Street."