Question: 7.35 The same article claiming that the correlation between changes in stock prices in Europe and the United States is 0.8 goes on to say:

7.35 The same article claiming that the correlation between changes in stock prices in Europe and the United States is 0.8 goes on to say: “Crudely, that means that movements on Wall Street can explain 80% of price movements in Europe.”

(a) Is this true?

(b) What is the correct percent explained if r ! 0.8?

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