Consider Two Securities Known as Security a and B

question 3

Multiple Choice

Consider two securities known as Security A and B.If returns on Security A decrease 10% while returns on Security B increase 10%,then the correlation coefficient is:

• A) Positive
• B) Negative
• C) Zero
• D) Impossible to determine

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Definitions:

Adjusting Entry

A journal entry made in the accounting records at the end of an accounting period to allocate income and expenditure to the appropriate period.

Direct Write-Off Method

An accounting practice where uncollectible accounts receivable are directly written off against revenue at the time they are deemed to be uncollectible.

Allowance Method

An accounting technique that estimates and reduces accounts receivable to reflect only amounts expected to be collected.

Allowance Method

A technique in accounting used to account for bad debts, where anticipated uncollectible accounts receivable are estimated and recorded.