Question

A higher than average return today is likely to be followed by a lower-than average return...

A higher than average return today is likely to be followed by a lower-than average return in the future when the:

serial correlation coefficient is equal to 0

serial correlation coefficient is greater than 1

serial correlation coefficient is positive

serial correlation coefficient is negative
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Answer #1

Ans:- A higher than average return today is likely to be followed by a lower than average return in the future when the serial correlation coefficient is negative.

Therefore the correct option is (d).

Serial Correlation coefficient tells us the relationship between security or variable and a lagged version of itself through various time interval. Serial correlation has only one security. In statistics, Negative serial correlation tends to have different signs from period to another.

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