When stock returns exhibit positive serial correlation, this means that ________ returns tend to follow ________ returns.
A) positive; positive
B) positive; negative
C) negative; positive
D) positive; zero

Question

Quizplus · Accepted Answer

Positive serial correlation means that there is a tendency for positive returns to follow positive returns. This suggests a trend in the stock prices, with prices increasing over time.

When Stock Returns Exhibit Positive Serial Correlation, This Means That