1215

In a multivariate normal distribution, a correlation tells the:

A) strength of the linear relationship between two of the variables.

B) relationship between the means and variances of the variables.

C) overall relationship between all the variables.

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This is true by definition. The correlation only applies to two variables at a time.

1215

A multivariate distribution is best defined as describing the behavior of:

A) two or more independent random variables.

B) a random variable with more than two possible outcomes.

C) two or more dependent random variables.

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A multivariate distribution describes the relationships between two or more random variables, when the behavior of each random variable is dependent on the others in some way.

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1215

A multivariate distribution:

A) specifies the probabilities associated with groups of random variables.

B) applies only to binomial distributions.

C) gives multiple probabilities for the same outcome.

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This is the definition of a multivariate distribution.

1215

Which of the following would least likely be categorized as a multivariate distribution?

A) The days a stock traded and the days it did not trade.

B) The return of a stock and the return of the DJIA.

C) The returns of the stocks in the DJIA.

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The number of days a stock traded and did not trade describes only one random variable. Both of the other cases involve two or more random variables.