Which of the Following Statements About the Correlation Coefficient Is

question 54

Multiple Choice

Which of the following statements about the correlation coefficient is correct?

• A) The correlation coefficient measures risk.
• B) The correlation coefficient is a number between -1 and +1.
• C) The correlation coefficient measures how two variables move relative to each other.
• D) All of the above are correct.

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Definitions:

Short-term Gain

Profit realized from the sale of assets held for a year or less, subject to taxes at ordinary income rates in many jurisdictions.

Long-term Gain

The profit from the sale of an asset held for more than a year, subject to lower capital gains tax rates.

Investment Portfolio

A collection of assets including stocks, bonds, mutual funds, and other investments held by an individual or an institution.

Recognize

In an accounting context, to recognize is to formally record an item within the financial statements of an entity, acknowledging its existence or occurrence.