You Read a Research Study That Claims to Have Found

question 205

Multiple Choice

You read a research study that claims to have found a correlation of r = -.43 between smoking and vegetable consumption. This means that

• A) the less people smoke, the fewer vegetables they eat.
• B) the more people smoke, the fewer vegetables they eat.
• C) the more people smoke, the more vegetables they eat.
• D) smoking and vegetable consumption are unrelated.

---

Definitions:

Retained Earnings

Retained earnings are the portion of a company's profits that are kept or reinvested in the business instead of being distributed to shareholders as dividends.

Weighted-average Shares

A calculation used in accounting and finance to determine the average number of shares outstanding in a company, adjusted for stock splits and other changes.

Price-earnings Ratio

A financial metric comparing a company's market price per share to its earnings per share, indicating the value given by the market for each dollar of earnings.

Price-earnings Ratio

The price-earnings ratio, or P/E ratio, measures a company's current share price relative to its per-share earnings, indicating the market's valuation of a company's growth potential.