Question

The sample correlation coefficient is equal to the covariance of
*x* and *y*

divided by the square root of the product of
s_{x}^{2} times s_{y}^{2}.

True

False

Answer #1

Assuming a linear relationship between X and
Y, if the coefficient of correlation (r) equals
−0.75, this means that:
a.
there is very weak correlation.
b.
the slope b1 is = −0.75.
c.
the value of X is always greater than the value of
Y.
d.
None of these choices are true.
Which of the following is a property of the slope,
b1?
a.
The slope equals one if X and Y have the same
variance.
b.
The slope has...

The coefficient of correlation represents the standard deviation
divided by the expected value.
True or False
Choosing projects with returns equal to the company norm but
having a higher level of risk will most likely lower the company's
stock price.
True or False

X, Y, Z are zero mean correlated random variables with common
correlation coefficient equal to - 1/2 and all variances equal to
one.
a. Find the best linear estimate of Z in terms of X and Y ?
b. Find the best linear estimator for X in terms of Y and Z?
c. What are the minimum mean square estimation errors in the
above cases?

explain the concept of covariance. How is covariance
used in Computing the correlation coefficient?

True or False: Assuming a linear relationship between X and Y,
if the coefficient of correlation (r) equals 0.50, this means that
50% of the variation in the dependent variable (Y) is due to
changes in the independent variable (X).

True or False: Assuming a linear relationship between X
and Y, if the coefficient of correlation (r)
equals 0.50, this means that 50% of the variation in the dependent
variable (Y) is due to changes in the independent variable (X).

calculate the covariance and correlation between x and y when x
represents the number on the top of a die and y represents the
number on the bottom of the die!

The square root of the variance is called the:
covariance
coefficient of variation
beta
standard deviation

Explain the significance of correlation coefficient and the
covariance in the portfolio design strategies.How does it influence
the benefits that can be derived from the diversification?

Can you explain the relationship of covariance and correlation
coefficient in the expected return of portfolio investment?

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