« previous next »

Author Question: While the covariance between stocks can take on a negative value, a correlation coefficient must be ... (Read 122 times)

brutforce

  • Hero Member
  • *****
  • Posts: 540
on: Jul 10, 2018
While the covariance between stocks can take on a negative value, a correlation coefficient must be positive, or at a minimum, zero.
 
  Indicate whether the statement is true or false.

Question 2

The more positive the degree of correlation between two assets, the greater the risk reduction when the assets are combined.
 
  Indicate whether the statement is true or false.


ryhom

  • Sr. Member
  • ****
  • Posts: 366
Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: FALSE
Explanation: Correlation coefficients can range from a value of +1.0 to -1.0.

Answer to Question 2

Answer: FALSE
Explanation: The LOWER the degree of correlation between two assets, the greater the risk reduction when the assets are combined.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Street names for barbiturates include reds, red devils, yellow jackets, blue heavens, Christmas trees, and rainbows. They are commonly referred to as downers.

Did you know?

According to the American College of Allergy, Asthma & Immunology, more than 50 million Americans have some kind of food allergy. Food allergies affect between 4 and 6% of children, and 4% of adults, according to the CDC. The most common food allergies include shellfish, peanuts, walnuts, fish, eggs, milk, and soy.

Did you know?

Pope Sylvester II tried to introduce Arabic numbers into Europe between the years 999 and 1003, but their use did not catch on for a few more centuries, and Roman numerals continued to be the primary number system.

Did you know?

There used to be a metric calendar, as well as metric clocks. The metric calendar, or "French Republican Calendar" divided the year into 12 months, but each month was divided into three 10-day weeks. Each day had 10 decimal hours. Each hour had 100 decimal minutes. Due to lack of popularity, the metric clocks and calendars were ended in 1795, three years after they had been first marketed.

Did you know?

There are 20 feet of blood vessels in each square inch of human skin.

Positive and Negative Symptoms of Schizophrenia Positive and Negative Symptoms of Schizophrenia
IQ and Genetics The closer the genetic relationship, the higher the correlation in IQ. Based on: Br IQ and Genetics The closer the genetic relationship, the higher the correlation in IQ. Based on: Br
Positive and Negative Stereotypes Positive and Negative Stereotypes
Touch the test light to the negative (–) terminal of the battery or a good engine ground to check ... Touch the test light to the negative (–) terminal of the battery or a good engine ground to check ...
The cell wall of a Gram-negative bacterium, E. coli The cell wall of a Gram-negative bacterium, E. coli
Positive and Negative Punishment Positive and Negative Punishment
Video: Summary of glucose catabolism

For a complete list of videos, visit our video library