Question

Which of the following is a FALSE statement of the correlation
coefficient?

Select one:

a. The closer the value of the correlation coefficient is to
negative one, the weaker the relationship between the returns on
the two securities.

b. The closer the absolute value of the correlation
coefficient is to zero, the weaker the relationship between the
returns on the two securities.

c. Positive correlation coefficients imply that the returns on
Security A tend to move in the same direction as those on security
B.

d. Negative correlation coefficients imply that the returns on
Security A tend to move in the opposite direction to those on
security B.

e. It measures how security returns move in relation to one
another.

Answer #1

The correlation of 1 means that there is a strong positive relationship between returns of two different securities.

The correlation of -1 means that there is strong negative relation between returns of two securities.

Correlation of zero means where is a weakest relationship between returns of two variables.

So statement (A ) would be false, because the closer the value of correlation coefficient to the negative one, there is a high negative correlation between return of two securities. It does not reflect a weak relationship between two security, instead it reflects a strong negative relationship. It means if security A will move in One direction the security B will move in another direction.

Rest of the statements are true because they reflect the correct correlation between return of two variables.

Show the correct answer would be option ( A).

Choose
ALL correct statements about the
correlation coefficient.
Group of answer choices
It measures the extent to which two random variables move
together.
The values range between -∞ to +∞ .
A value of +1 implies that the returns for the two stocks move
together in a completely linear manner.
A value of 0 implies that the returns move in a completely
opposite direction.

Which of the following statements are true of correlation
coefficients?
Group of answer choices
The more negative the number is, the weaker the
relationship.
A correlation coefficient of -0.90 indicates that there is an
inconsistent relationship between the variables.
The closer the coefficient is to 1 or -1, the weaker the
relationship.
A correlation coefficient of 0.05 indicates that there is an
inconsistent relationship between the variables.
Which type of analysis is more flexible than an
independent-samples t-test and allows...

correlation measures the degree to which two variables are
related to one another.
Here are the definitions of the three possibilities:
Positive correlations: In this type of
correlation, both variables increase or decrease at the same time.
A correlation coefficient close to +1.00 indicates a strong
positive correlation.
Negative correlations: This type of
correlation indicates that as the amount of one variable increases,
the other decreases (and vice versa). A correlation coefficient
close to -1.00 indicates a strong negative correlation....

Which of the following statements concerning the linear
correlation coefficient is/are true?
A: If the linear correlation coefficient for two variables is zero,
then there is no relationship between the variables.
B: If the slope of the regression equation is negative, then the
linear correlation coefficient is negative.
C: The value of the linear correlation coefficient always lies
between -1 and 1 inclusive.
D: A correlation coefficient of 0.62 suggests a stronger linear
relationship than a correlation coefficient of -0.82.

Which of the following statements concerning the linear
correlation coefficient are true?
I: If the linear correlation coefficient for two variables is
zero, then there is no relationship between the variables.
II: If the slope of the regression line is negative, then the
linear correlation coefficient less than one.
III: The value of the linear correlation coefficient always lies
between -1 and 1.
IV: A linear correlation coefficient of 0.62 suggests a stronger
linear relationship than a linear correlation coefficient...

Match the following
sample correlation coefficients with the explanation of what that
correlation coefficient means. Type the correct letter in each
box.
1. ?= −.15
2. ?= .92
3. ?= −.97
4. r= -1
The regression line is the straight line that bests fits a set
of data points according to what?
A. Most accurate regression criterion
B. Least-squares criterion.
C. Greatest-squares criterion
D. None of the above
4. ?=−1
A. a strong negative relationship between ? and
?
B....

Which of the following statements concerning regression and
correlation analysis is/are true?
A. If the correlation coefficient is zero, then there is no linear
relationship between the two variables.
B. A negative value for the correlation coefficient indicates that
high values of the independent variable are correlated with low
values of the dependent variable.
C. The slope coefficient for a simple linear regression model
measures the expected change in the independent variable for a unit
change in the dependent variable....

Which of the following is NOT a property of the linear
correlation coefficient r?
A. The value of r is always between minus−1 and 1 inclusive.
B.The linear correlation coefficient r is robust. That is, a
single outlier will not affect the value of r.
C.The value of r measures the strength of a linear
relationship.
D.The value of r is not affected by the choice of x or y.

Which of the following is TRUE?
Select one:
a. The correlation coefficient is an index of the degree of
movement of an asset's return in response to a change in the
risk-free asset return.
b. The capital asset pricing model (CAPM) links together
unsystematic risk and return for all assets.
c. The security market line is not stable over time and shifts over
time in response to changing inflationary expectations.
d. The CAPM uses standard deviation to relate an asset's...

A Correlation Coefficient is a measurement of
the relationship between two variables. A positive correlation
means that as one variable increases, the second variable increases
too. A negative correlation means that as one variable increases,
the second variable decreases, or as one variable decreases, the
second variable increases. Positive and negative correlations
exists in nature, science, business, as well as a variety of other
fields. Please watch the following video for a graphical
explanation of the correlation coefficient:
For Discussion...

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