What Is the Correlation Coefficient Between the Following Two Investments

question 23

Multiple Choice

What is the correlation coefficient between the following two investments? Year Return A Return B

• A) Positive
• B) Negative
• C) Zero
• D) Unable to determine without knowing the covariance

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Definitions:

Bond Payable

A long-term liability account that represents the amount a company owes to bondholders, to be repaid at a future date.

Issue Price

The issue price is the price at which a company's securities, such as stocks or bonds, are first offered for sale to the public when they are issued.

Journal Entry

The record of a financial transaction in an accounting journal, showing the accounts and amounts debited and credited.

Adjusting Entries

Entries necessary at the end of the accounting period to measure all revenues and expenses of that period and update assets and liabilities.