The Returns on the Stock of DEF and GHI Companies

question 67

Multiple Choice

The returns on the stock of DEF and GHI companies over a 4 year period are shown below:

From this limited data you should conclude that returns on

• A)DEF and GHI are negatively correlated.
• B)DEF and GHI are somewhat positively correlated.
• C)DEF and GHI are perfectly positively correlated.
• D)DEF and GHI are uncorrelated.

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Definitions:

Amortization Expense

The systematic and gradual charge to expense of the cost of an intangible asset over its useful life.

Functional Currency

A redefined definition: The currency that a business uses for most of its transactions, reporting, and financial statements.

Capital Assets

Long-term tangible or intangible assets used in operations of a business that are not intended for sale in the regular course of business.

Exchange Rates

The rate at which one currency can be exchanged for another currency.