Question: Explain why this statement is incorrect: When two assets have a +1.00 correlation, they move up and down at the same time, with the same

Explain why this statement is incorrect: “When two assets have a +1.00 correlation, they move up and down at the same time, with the same magnitude.”

Step by Step Solution

★★★★★

3.34 Rating (154 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

The statement that when two assets have a 100 correlation they move up and down at the same time wit... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Essentials Of Econometrics Questions!

Q:

ENSURE WORK IS ORIGINAL OR I REJECT AND REPORT YOU TON THE SUPPORT INSTANTLYThe end result does now not should be taken care of. You may additionally expect n 6 length(xs). [Hint: Function least is a...

Q:

What type of business is S. G. Cowen? How is this firm different from the other financial firms? How systems and operations of financial firms are different from other types of businesses - say...

Q:

Please help with the discusin questions ! I give thumbs up Case #1: Hailing a New Era: Haier in Japan As one of the most valuable brands in China, Haier designs,manufactures, and sells various home...

Q:

i need help with qestions 1-15 Question 1 1 pts Kohl's Corp has a beta of 2. and the expected market return is 0.09. In addition, Treasury bills (risk-free asset) are currently yielding 0.03. Find...

Q:

i need help with qestions 2-15 Question 2 .1 pts Which of the following statement is incorrect? A beta of 1 indicates a risk-free security, such as a U.S. Treasury bill. The risk that investors...

Q:

hh explain111 2. Use the geometric series formula to express the present value of payments through p, T and rm, where I'm is the monthly interest rate. Plug in the numeric value for p, 7 and put this...

Q:

There are 10 potential entrants into the market for tomatoes. All tomato growers are identical. They face a fixed cost of 500 if they choose to enter the market and then have a marginal cost of 10...

Q:

It is exactly 24 hours before Lauren's physics final. She has an economics final directly after the physics final and has no time to study in between. Lauren wants to be a physicist, so she places...

Q:

2. An exchange option gives its owner the right, but not the obligation, to exchange Q2 units of asset S2 for Q units of asset S at expiration. That is, its payoff is max (Q1S1 - Q2S2,0) Assume that...

Q:

An exchange option gives its owner the right, but not the obligation, to exchange Q2 units of asset S2 for Q1 units of asset Si at expiration. That is, its payoff is max(Q15 - Q2S2,0) Assume that two...

Q:

In a C++ application, calculate the Betas of 3 stocks to an index using data from a file. Add to your program three stocks in a portfolio. Using the Betas and random number generation for the returns...

Q:

Oneida Furniture Company deposits all cash receipts each Wednesday and Friday in a night depository, after banking hours. The data required to reconcile the bank statement as of June 30 have been...

Q:

Which of the following is NOT a composition rule for synchronous sequential circuits? a . At least one element is a register b . All registers receive the same clock signal c . Every cyclic path...

Q:

6. In Problem 3, Set 17.1a, (a) Determine the expected number of quarters until a debt is either repaid or lost as bad debt. (b) Determine the probability that a new loan will be written off as bad...

Q:

Describe the capabilities of Ciscos IX5000 telepresence system. How do they promote collaboration and innovation?

Q:

Why would a company like Produban want to invest in a telepresence system such as Ciscos IX5000? How are videoconferencing technology and telepresence related to Produbans business model and business...

Q:

What kinds of other companies might benefit from a telepresence service such as IX5000? Why?

Q:

4. Assume that all parties involved face an interest rate of 7%. An enterprise can be financed which will generate $100 million in earnings annually forever and with no risk with either the sale of...

Q:

1. Howell Co. had the following first-year amounts for a $7,000,000 construction contract: Actual costs $2,000,000 Estimated costs to complete: $6,000,000 Progress billings: $1,800,000 Cash...

Q:

Procter and Gamble (PG) paid an annual dividend of $2.89 in 2021. You expect PG to increase its dividends by 7.9% per year for the next five years (through 2026), and thereafter by 2.5% per year. If...