The Degree or Strength of a Relationship Between Two Variables

question 109

Multiple Choice

The degree or strength of a relationship between two variables is shown by the:

• A) alpha.
• B) mean.
• C) mean absolute deviation.
• D) coefficient of correlation.
• E) cumulative error.

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Definitions:

R-squares

A statistical measure in finance that represents the proportion of the variance for a dependent variable that's explained by an independent variable or variables in a regression model.

Portfolio Performance

The assessment of how an investment portfolio has done in terms of returns for the risk taken, often compared against benchmarks or goals.

Treynor-Black Model

A special case of the Markowitz model of efficient diversification, derived by assuming returns are generated by the index model.

Residual Variance

The variance of the error terms in a regression model, representing the amount of variation that cannot be explained by the model's inputs.