A Correlation Coefficient Is an Index Number Constrained to Fall

question 84

True/False

A correlation coefficient is an index number constrained to fall between the range of -1.0 and +1.0 that communicates both the strength and the direction of association between three or more variables.

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Definitions:

Stock Price

Represents the current market value of a company’s shares, influenced by investor supply and demand.

Hedge Fund

An alternative investment fund that employs various strategies to earn active return, or alpha, for investors.

Arbitrage

The simultaneous purchase and sale of an asset to profit from a difference in the price in two different markets.

Derivatives

Financial instruments whose value is derived from the value of an underlying entity such as an asset, index, or interest rate.