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

---

Definitions:

Failed Marriage

A marriage that has ended in separation or divorce.

Integrity Status

A condition or quality of being whole, complete, or unimpaired, often used in the context of ethical or moral uprightness.

Succession Planning

The process of identifying and developing new leaders who can replace old leaders when they leave, retire, or die.