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4. Determine the correlation between price movements of stocks A and B using the forecast of their rate of return and the assessments of the possible states of the world in the following table. Before doing the correlation, from an expectation of whether that correlation will be closer to 1 or -1 by merely inspecting the member. (Please give brief explanation with the formula) State of the economy Profitability Stock A: Rate of Return Rate of Return Stock B: Moderate recession 0.05 -0.02 -0.20 0.15 -0.01 -0.10 Slight recession 0.60 0.15 0.15 2% growth 0.20 0.15 0.30 3% growth

4. Determine the correlation between price movements of stocks A and B using the forecast of their rate of return and the assessments of the possible states of the world in the following table. Before doing the correlation, from an expectation of whether that correlation will be closer to 1 or -1 by merely inspecting the member. (Please give brief explanation with the formula) State of the economy Profitability Stock A: Rate of Return Rate of Return Stock B: Moderate recession 0.05 -0.02 -0.20 0.15 -0.01 -0.10 Slight recession 0.60 0.15 0.15 2% growth 0.20 0.15 0.30 3% growth

Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter4: Equations Of Linear Functions
Section4.5: Correlation And Causation
Problem 14PPS
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4. Determine the correlation between price movements of stocks A andB using the forecast of their rate of return and the assessments of the possible states of the world in the following table. Before doing the correlation, from an expectation of whether that correlation will be closer to 1 or -1 by merely inspecting the member. (Please give brief explanation with the formula) State of the economy Profitability Stock A: Rate of Return Rate of Return Stock B: Moderate 0.05 -0.02 -0.20 recession 0.15 -0.01 -0.10 Slight recession 0.60 0.15 0.15 2% growth 0.20 0.15 0.30 3% growth
Transcribed Image Text:4. Determine the correlation between price movements of stocks A andB using the forecast of their rate of return and the assessments of the possible states of the world in the following table. Before doing the correlation, from an expectation of whether that correlation will be closer to 1 or -1 by merely inspecting the member. (Please give brief explanation with the formula) State of the economy Profitability Stock A: Rate of Return Rate of Return Stock B: Moderate 0.05 -0.02 -0.20 recession 0.15 -0.01 -0.10 Slight recession 0.60 0.15 0.15 2% growth 0.20 0.15 0.30 3% growth
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