A student who has skipped many classes and not studied the course material was surprised to learn that there was a test when he showed-up for class. The student’s strong belief that he will not pass the test is called subjective probability. Diversification can reduce or eliminate the risk of investment loss by investing in different types of companies and in different types of financial assets. Combing risks that are perfectly and positively correlated cannot reduce the overall risk of the business entity Objective risk is defined as the relative variation of expected loss from actual loss
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
true or false
- A student who has skipped many classes and not studied the course material was surprised to learn that there was a test when he showed-up for class. The student’s strong belief that he will not pass the test is called subjective
probability . - Diversification can reduce or eliminate the risk of investment loss by investing in different types of companies and in different types of financial assets.
- Combing risks that are perfectly and
positively correlated cannot reduce the overall risk of the business entity - Objective risk is defined as the relative variation of expected loss from actual loss
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