The Correlation Between the Return on the Risk-Free Asset with a Constant

question 103

Multiple Choice

The correlation between the return on the risk-free asset with a constant return over time and the return on a risky asset is always:

• A).-1
• B)0
• C)1
• D)0.5

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Definitions:

Liabilities

Financial obligations or debts that a company owes to external parties.

Cash Dividend

A cash dividend is a payment made by a company out of its earnings to shareholders in the form of cash.

Stockholders Equity

The residual interest in the assets of a corporation after deducting liabilities, representing ownership value.

Assets

Economic resources owned by a business or individual that are expected to provide future benefits.