If the Correlation Between the Physical Weight and Reading Ability

question 91

Multiple Choice

If the correlation between the physical weight and reading ability of children is -1.00, this would indicate that

• A) there is very little statistical relationship between weight and reading ability among children.
• B) low body weight has a negative effect on the reading abilities of children.
• C) better reading ability is associated with lower physical weight among children.
• D) body weight has no causal influence on the reading abilities of children.

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Definitions:

Market Risk Premium

The extra return expected by investors for taking on the risk of investing in the stock market over a risk-free rate.

Security Market Line

A line representing the relationship between the expected return of a market security and its risk, as measured by beta.

Systematic Risk

The collective risk for all investments in a market or a specific part of the market that cannot be offset through diversification.

Unsystematic Risk

The danger linked to a certain company or sector that can be reduced by spreading investments across a varied portfolio.