You Are Constructing a Scatter Plot of Excess Returns for Stock

question 34

Multiple Choice

You are constructing a scatter plot of excess returns for stock A versus the market index. If the correlation coefficient between stock A and the index is -1, you will find that the points of the scatter diagram ________ and the line of best fit has a ________.

• A) all fall on the line of best fit; positive slope
• B) all fall on the line of best fit; negative slope
• C) are widely scattered around the line; positive slope
• D) are widely scattered around the line; negative slope

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Definitions:

Uncommunicative

The quality of being unwilling or unable to share thoughts, feelings, or information with others.

Aversive Conditioning

A method of behavior modification that involves pairing an unwanted behavior with discomfort or unpleasantness to reduce or eliminate that behavior.

Unwanted Behavior

Actions or conduct deemed undesirable or inappropriate by society, an organization, or an individual.

Drinking Alcohol

The consumption of beverages containing ethanol, which can affect mood, behavior, and health.