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Which of the Following Is a FALSE Statement of the Correlation

Question 54

Multiple Choice

Which of the following is a FALSE statement of the correlation coefficient?


A) It measures how security returns move in relation to one another.
B) Positive correlation coefficients imply that the returns on Security A tend to move in the same direction as those on security B.
C) Negative correlation coefficients imply that the returns on Security A tend to move in the opposite direction to those on security B.
D) The closer the absolute value of the correlation coefficient is to one, the weaker the relationship between the returns on the two securities.

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