An investment and serial correlation

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Reference no: EM132033984

1. An investment...

-is acceptable if its calculated payback period is less than some prespecified period of time.

-should be accepted if the payback is positive and rejected if it is negative.

-should be rejected if the payback is positive and accepted if it is negative.

-is acceptable if its calculated payback period is greater than some prespecified period of time.

-should be accepted any time the payback period is less than the discounted payback period, given a positive discount rate.

2. Serial correlation

-indicates a reversal in the direction of returns when the coefficient is positive.

-involves the relationship of one stock’s returns over various time periods.

-indicates a tendency toward reversal when its coefficient is positive.

-measures the cumulative difference between the returns on two similar securities.

-measures the current relationship between the returns on two securities.

Reference no: EM132033984

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