Which of the Following Statements Is Correct

question 17

Multiple Choice

Which of the following statements is correct?

• A)For a few firms in completely different industries, it is possible to have a correlation that approaches -2.0.
• B)A correlation of -1.0 means that the two firms are uncorrelated or that they have no relationship.
• C)Most common stocks have low correlation with each other since they operate in different industries.
• D)None of these choices are correct.

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its current assets over its current liabilities.

Working Capital

The difference between a company's current assets and current liabilities, indicating its short-term liquidity.

Current Assets

Current assets are short-term assets that are expected to be converted into cash, sold, or consumed within one year or within the business's operating cycle, whichever is longer.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity available to fund its day-to-day operations.