Question
If the return of two stocks has a correlation of 1, what does this imply about the relative movements in the stock prices? (Select the
If the return of two stocks has a correlation of 1, what does this imply about the relative movements in the stock prices? (Select the best choice below.)
A. If the price of one stock goes up, the other stock price always goes up as well.
B. For each dollar increase in the price of one stock, the other stock also increases by a dollar.
C. The percentage change in the stocks prices are exactly opposite of each other long dash for every positive change in the one stock, the other stock has a negative change.
D. The returns of the two stocks are unrelated.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started