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NEW QUESTION: 1
What are some of the drawbacks of correlation estimates? Which of the following statements identifies major problems with correlation calculations?
I. Correlation estimates are not able to capture increases in factor co-movements in extreme market scenarios.
II. Correlation estimates tend to be unstable.
III. Historical correlations may not forecast future correlations correctly.
IV.
Correlation estimates assume normally distributed returns.
A. I and IV
B. II, III, and IV
C. I and II
D. I, II and III
Answer: D
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Explanation/Reference:
Explanation:
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