A Strong Relationship Would Be Represented by Which of the Following

question 41

Multiple Choice

A strong relationship would be represented by which of the following correlations?

• A)0.80
• B)0.70
• C)0.60
• D)0.50

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Definitions:

PI

The profitability index (PI), in financial management, is a method used to evaluate the desirability of an investment or project, calculating the ratio of the present value of future cash flows to the initial investment.

Cost of Capital

A financial metric representing the minimum return that a company must earn on its existing asset base to satisfy its creditors, owners, and other providers of capital.

Average Rate

The mean value calculated by dividing the sum of all rates by the number of rates.

Payback Period

The length of time required to recover the initial cost of an investment, calculated by dividing the initial investment by annual cash inflows.