If the Correlation Between Two Shares Is −1, the Returns

question 38

Multiple Choice

If the correlation between two shares is −1, the returns:

• A)generally move in the same direction.
• B)move perfectly opposite one another.
• C)are unrelated to one another as it is < 0.
• D)have standard deviations of equal size but opposite signs.
• E)None of the above.

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