The Coefficient of Correlation

question 14

Multiple Choice

The coefficient of correlation

• A) takes on values anywhere from 0 to +1.
• B) takes on values anywhere from −1 to 0.
• C) takes on values anywhere from −1 to +1.
• D) takes on values of 0 or larger.

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Definitions:

Portfolio

An assortment of financial assets owned by a person or an organization.

Beta

A criterion for the volatility, or established risk, inherent in a security or portfolio ensemble in the context of the broader market.

Portfolio

A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including mutual funds and ETFs.

Risk-Free Asset

An investment with a guaranteed return and no possibility of default, typically associated with government bonds.