You Are Constructing a Scatter Plot of Excess Returns for Stock

Multiple Choice

You are constructing a scatter plot of excess returns for Stock A versus the market index.If the correlation coefficient between Stock A and the index is -1 you will find that the points of the scatter diagram ______________________ and the line of best fit has a ______________.

A) all fall on the line of best fit; positive slope
B) all fall on the line of best fit; negative slope
C) are widely scattered around the line; positive slope
D) are widely scattered around the line; negative slope