If Scientific Research Shows That There Is a Positive Correlation

question 19

Multiple Choice

If scientific research shows that there is a positive correlation between the number of bars in a city and the number of churches in a city, we know that

• A) people who go to church are more likely to go to bars.
• B) drinking makes people feel like going to church.
• C) people who go to church are more likely to go to bars and drinking makes people feel like going to church
• D) we can't make any assumptions, because correlation doesn't tell us about cause and effect.

---

Definitions:

Beta

A measure of a stock's volatility in relation to the overall market; a beta greater than 1 indicates higher volatility than the market.

Standard Deviation

In finance, it measures the investment's volatility or risk by determining how much the returns on the investment can deviate from the average return.

Risk-Free Return

The theoretical return on an investment with zero risk, often represented by the yield on government securities.

Managed Portfolio

An investment portfolio that's actively managed by a professional, aiming to achieve specified investment goals.