If the Correlation of the Returns of Two Assets Is

question 10

Multiple Choice

If the correlation of the returns of two assets is 100%, then

• A)if one asset's return increases by 10%, the second asset's return will decrease by exactly 10%.
• B)if one asset's return increases by 10%, the second asset's return will also increase, but not necessarily by 10%.
• C)if one asset's return increases by 10%, the second asset's return will usually, but not always, also increase.
• D)if one asset's return increases by 10%, the second asset's return will also increase by exactly 10%.

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Definitions:

Liquidated

Refers to the process of converting assets into cash or paying off a debt.

Balance Sheet Amounts

The monetary values assigned to assets, liabilities, and equity in the balance sheet at a specific point in time, reflecting a company’s financial position.

Paid-in Capital

The amount of capital "paid in" by investors during common or preferred stock issuances, including the par value of the shares and any amount paid in excess.

Organization Expenses

Expenses associated with the formation of a corporation or organization, such as legal fees, registration fees, and promotional expenses.