The Correlation Coefficient Between Two Assets Equals to _________

question 84

Multiple Choice

The correlation coefficient between two assets equals to _________.

• A) their covariance divided by the product of their variances
• B) the product of their variances divided by their covariance
• C) the sum of their expected returns divided by their covariance
• D) their covariance divided by the product of their standard deviations

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Definitions:

Acquisition Analysis

A financial and strategic assessment to understand the value, synergies, and potential benefits of acquiring a company or asset.

Target Firm

A target firm is a company that is identified as a potential acquisition candidate by another company or investor.

Merger NPV

The net present value of combining two or more companies, taking into account the projected cash flows and synergies resulting from the merger.

Stock Exchange Bid

An offer made by an investor, trader, or dealer to buy a security that specifies the price and the quantity the buyer is willing to purchase.