A Negative Correlation Means That

question 232

Multiple Choice

A negative correlation means that:

• A)high values of one variable are associated with low values of the other.
• B)high values of one variable are associated with high values of the other.
• C)low values of one variable are associated with low values of the other.
• D)there is no relationship between the two variables.

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Definitions:

Underlying Asset

The financial instrument upon which derivatives like options and futures are based.

Exercise Price

The price at which the holder of an option can buy (call) or sell (put) the underlying asset.

Municipal Bond

A debt security issued by municipalities to finance public projects, often tax-exempt for investors.

Marginal Tax Bracket

The tax rate that applies to the last dollar of the taxpayer's income, indicating the percentage of tax applied to their highest level of income.