The Appropriate Range for the Coefficient of Correlation (R) Is

question 92

Multiple Choice

The appropriate range for the coefficient of correlation (r) is

• A)0 ≤ r ≤ 1.
• B)−% ≤ r ≤ +%.
• C)−1 ≤ r ≤ 1.
• D)−1 ≤ r ≤ +%.

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Definitions:

Securities

Securities are financial instruments that represent an ownership position in a publicly-traded corporation (stock), a creditor relationship with a governmental body or a corporation (bond), or rights to ownership as represented by an option.

Portfolios

A portfolio containing various types of financial investments, including stocks, bonds, commodities, cash, cash equivalents, mutual funds, and ETFs.

Exposure

The degree to which an investment or portfolio is subject to various risks, such as market, credit, or operational risks.

Underlying Security

A stock, bond, currency, or commodity on which an option or futures contract is based.