As the Correlation Coefficient Gets Closer to +1

question 94

Multiple Choice

As the correlation coefficient gets closer to +1.00 or -1.00,then the relationship will be

• A) weaker.
• B) stronger.
• C) more variable.
• D) harder it becomes to predict.

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Definitions:

Cash Inflows

Cash Inflows are the money or cash received by a business from its various activities, including sales, investments, financing, etc.

Profitability Index

A capital budgeting tool that measures the ratio of the present value of future cash flows generated by an investment to the initial investment cost, used to assess the profitability.

Required Rate Of Return

The minimum expected return on an investment necessary for an investor to consider it worthwhile.

Required Return

The expected yield that an investor anticipates receiving on an investment, taking into account the risk associated with it.