Exhibit 8.1
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) $$\begin{array}{l}
\quad\quad\quad\quad\quad\quad\quad\quad\text { Rates of Return }\
\begin{array} { c c c }
\text { Year } & \text { RA Computer } & \text { Market Index } \
\hline 1 & 13 & 17 \
2 & 9 & 15 \
3 & - 11 & 6 \
4 & 10 & 8 \
5 & 11 & 10 \
6 & 6 & 12
\end{array}
\end{array}$$
-Refer to Exhibit 8.1. Compute the correlation coefficient between RA Computer and the Market Index.
A)-0.32
B)0.78
C)0.66
D)0.58
E)0.32

Question

Exhibit 8.1
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) $$\begin{array}{l}
\quad\quad\quad\quad\quad\quad\quad\quad\text { Rates of Return }\
\begin{array} { c c c } 
\text { Year } & \text { RA Computer } & \text { Market Index } \
\hline 1 & 13 & 17 \
2 & 9 & 15 \
3 & - 11 & 6 \
4 & 10 & 8 \
5 & 11 & 10 \
6 & 6 & 12
\end{array}
\end{array}$$
-Refer to Exhibit 8.1. Compute the correlation coefficient between RA Computer and the Market Index.
A)-0.32
B)0.78
C)0.66
D)0.58
E)0.32

Quizplus · Accepted Answer

The correlation coefficient is calculated using the formula for Pearson's correlation, which measures the linear relationship between two datasets. After computing the covariance and standard deviations of the returns, the correlation coefficient is approximately 0.66.

Exhibit 81 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

Exhibit 81
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)