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Hide Transcribed Text 13. Regression Fallacy. Historically, consecutive-year return rates had a correlation of0.57. Suppose that Stock A had a year1 return rate that was
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13. Regression Fallacy. Historically, consecutive-year return rates had a correlation of0.57. Suppose that StockAhad a year1 return rate that was 4 standard deviations below the mean. (a) How many standard deviations [above or below?] the mean would you predict for the year2 return rate for Stock A? (b) Explain why "4 standard deviations below the mean" is not a reasonable prediction.
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