A Correlation Coefficient of

question 22

Multiple Choice

A correlation coefficient of .6 would indicate a ______.

• A) moderate to strong positive relationship
• B) weak to moderate positive relationship
• C) moderate negative relationship
• D) moderate positive relationship

---

Definitions:

Beta

A measure of the volatility or systematic risk of a security or a portfolio compared to the market as a whole.

Unsystematic Risk

The risk associated with a specific company or industry, which can be mitigated through diversification.

Systematic Risk

The risk inherent to the entire market or market segment, which cannot be eliminated through diversification.

Beta

Beta is a measure of the volatility, or systematic risk, of a security or portfolio in comparison to the market as a whole, indicating its sensitivity to market movements.