When Two Variables Have a Strong Negative Correlation, the Correlation

question 331

Multiple Choice

When two variables have a strong negative correlation, the correlation coefficient will be close to:

• A) -10.
• B) +1.
• C) 0.
• D) -1.

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Definitions:

Inflation-Adjusted

Describes values that have been adjusted for inflation, often to compare the real purchasing power of money or to reflect the real value of earnings or assets over time.

Exchange Rate

The price of one country's currency expressed in another country's currency.

Purchasing-Power Ratio

The relative value of two currencies in terms of their ability to purchase a specific set of goods and services.

Stock Beta

A measure of a stock's volatility in relation to the overall market; it indicates how much the stock's price is likely to move compared to market fluctuations.