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Basic Question 3 of 3
Which of the following statements is not true?
B. An inverse relationship between X and Y implies negative correlation.
C. The correlation between two random variables is given by the ratio of their covariance with the product of their standard deviations.
A. -1 < σ(X,Y) < 1
B. An inverse relationship between X and Y implies negative correlation.
C. The correlation between two random variables is given by the ratio of their covariance with the product of their standard deviations.
User Contributed Comments 4
| User | Comment |
|---|---|
| annieyiyan | I thought the correct answer: 0<=p(x,y)=1, why the joint probility could go negotively (-1<=p(x,y) |
| mike250 | it's not joint prop. It is the correlation between X and Y. |
| alester83 | annie, that statement is correct for covariance |
| Rachelle3 | A very complicated way of saying at some point it must be from -1 up to 1 compare correct answer to the option of the wrong answer A which does not show < = signs. |
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Learning Outcome Statements
interpret correlation between two variables to address an investment problem
CFA® 2025 Level I Curriculum, Volume 1, Module 3.