A Correlation of 0

question 22

True/False

A correlation of 0.60 is stronger than a correlation of −0.60.

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Definitions:

Clientele Effect

The attraction of companies with specific dividend policies to those investors whose needs are best served by those policies. Thus, companies with high dividends will have a clientele of investors with low marginal tax rates and strong desires for current income. Similarly, companies with low dividends will attract a clientele with little need for current income and who often have high marginal tax rates.

Investment Opportunities

Investment Opportunities refer to avenues or instruments that offer potential for financial return, such as stocks, bonds, real estate, or other assets.

Profitable Projects

Initiatives undertaken by a business that are expected to generate earnings exceeding their costs.

Clientele Effect

A theory suggesting that certain stocks attract particular types of investors based on dividend policies or investment strategies.