“Passive investors outperform active investors during recession”. Discuss the statement citing examples. A stockbroker calls you and suggests that you invest in the Ambrick Company. After analyzing the firm’s annual report and other material, you believe that the distribution of rates of return is as follows: Possible Rate of Return Probability -0.60 0.05 -0.3 0.20 -0.10 0.10 0.20 0.30 0.40 0.20 0.80 0.15 Compute the expected return [E(Ri)] on Ambrick stock
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.
“Passive investors outperform active investors during recession”. Discuss the statement citing
examples.
A stockbroker calls you and suggests that you invest in the Ambrick Company. After analyzing
the firm’s annual report and other material, you believe that the distribution of rates of return is as
follows:
| Possible Rate of Return | Probability |
| -0.60 | 0.05 |
| -0.3 | 0.20 |
| -0.10 | 0.10 |
| 0.20 | 0.30 |
| 0.40 | 0.20 |
| 0.80 | 0.15 |
Compute the expected return [E(Ri)] on Ambrick stock
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