Which of the Following Statements Is Correct

question 105

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 the statements are correct.

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Definitions:

Average Accounting Return

A measure of an investment's profitability, calculated as the average net income divided by the average investment.

Average Book Value

The mean value of an asset or investment determined by its original cost minus depreciation or amortization.

Average Cash Inflow

The mean amount of money received by a company over a defined period, typically calculated for assessment or planning purposes.

Average Net Income

The mean amount of revenue remaining after all expenses, taxes, and costs have been deducted over a certain period.