What Is the Correlation Coefficient Between the Market Return and a Risk-Free

question 145

Multiple Choice

What is the correlation coefficient between the market return and a risk-free asset?

• A) +¥
• B) -¥
• C) +1
• D) -1
• E) Zero

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Definitions:

Least Squares

A mathematical procedure for finding the best-fitting curve to a given set of points by minimizing the sum of the squares of the offsets (the vertical distances) from the points to the curve.

Traffic Accidents

Traffic accidents are unexpected events involving vehicles on the road, leading to damage, injuries, or fatalities, often caused by risky driving behaviors, environmental conditions, or mechanical failures.

Independent

A variable or condition that is manipulated or classified in an experiment to investigate its effect on the dependent variable without being influenced by other variables.

Deviations

Differences between individual observations and a central point, often the mean, in a data set.