The term Corr($\varepsilon$_R ,$\varepsilon$ _T )= 0 tells us that: A)all error terms of company R and T are 0. B)the unsystematic risk of companies R and T is unrelated or uncorrelated. C)the correlation between the returns of companies R and T is -1. D)the systematic risk companies R and T is unrelated. E)None of the above.

Question

Quizplus · Accepted Answer

Corr(F1F1F1S1F1F1F10 _R ,F1F1F1S1F1F1F10 _T )= 0 means that there is no correlation between the unsystematic risk of companies R and T. It does not give any information about the error terms or systematic risk.

The Term Corr ε\varepsilonε R ε\varepsilonε T )= 0 Tells Us That: A)all Error Terms of Tells

The Term Corr $\varepsilon$ _R $\varepsilon$ _T )= 0 Tells Us That:
A)all Error Terms of Tells