Dr Stanhope Is Trying to Determine Which Type of Correlation

question 147

Multiple Choice

Dr. Stanhope is trying to determine which type of correlation is represented on his scatterplot, in which nearly all of his data are clustered along a diagonal line running from higher numbers on the left down to lower numbers on the right. Which type of correlation is represented by this pattern?

• A) positive
• B) zero
• C) negative
• D) we need more information to draw a conclusion

---

Definitions:

Net Cash Inflows

The total amount of cash received minus the total amount of cash outflows over a specified period.

Operating Income

Operating income is the profit earned from a firm's normal business operations, excluding non-operating income and expenses like interest and taxes.

Cash Payback Period

The duration it takes for an investment to generate cash flows sufficient to recover the initial investment cost, often used in capital budgeting to assess investment attractiveness.

Payback Period

The length of time required to recover the cost of an investment or project.