The Term Corr(ε _R,ε _T)= 0 Tells Us That

question 36

Multiple Choice

The term Corr(ε _R,ε _T) = 0 tells us that:

• A) the error terms of company R and T are 0.
• B) the unsystematic risk of companies R and T is unrelated or uncorrelated.
• C) the correlation between the returns of companies R and T is greater than zero.
• D) the systematic risk companies R and T is unrelated.

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Definitions:

Peak-to-peak

The difference in voltage between the highest and lowest points in a waveform.

Effective

Producing a decided, decisive, or desired effect; efficiency in producing a desired result.

RMS

Root Mean Square, a statistical measure of the magnitude of a varying quantity, often used to compute the effective value of an alternating current or voltage.

Apparent

Refers to the apparent power in an AC circuit, combining both the real (true) power and reactive power, measured in volt-amperes (VA).