Question

Consider the following:

A.Asset A has an expected return of 12.5% and a standard deviation in expected returns of 7.5%.
B.Asset B has an expected return of 13.33% and a standard deviation in expected returns of 4%
Suppose a portfolio is invested 50% in Asset A and 50% in Asset B.The standard deviation of the portfolio = 5.75%.
What is the correlation coefficient in expected returns between Asset A and Asset B? Correlation(A,B) = ________ (Round your answer to 2 decimal places, e.g 0.36)

Answer 1

The null hypothesis states that after controlling for sales and roe, ros has no effect on CEO salary. The alternative hypothesis suggests that better stock market performance increases CEO salary.

Step-by-step explanation:

The null hypothesis in this case is that after controlling for sales and return on equity (roe), return on the firm's stock (ros) has no effect on CEO salary. Thus, the null hypothesis is that β3 = 0. The alternative hypothesis is that better stock market performance, indicated by a higher return on the firm's stock, increases CEO salary. This is represented by the alternative hypothesis β3 > 0.