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In the context of financial risk management, it is essential to assess the relationship between the returns of two financial assets to determine if they exhibit any form of dependency. By doing this, a risk analyst aims to evaluate if movements in the return of one asset can be associated with movements in the return of another asset. Given this scenario, which of the following statements accurately describes the concepts of correlation and dependence?
A
Returns on financial assets tend to be independent.
B
Pearson's correlation measures both linear and nonlinear dependence.
C
Correlation and the regression slope are closely related.
D
If the returns of the two assets are normally distributed, their rank correlation and Pearson's correlation would not be equal.