The Magnitude of the Pearson Correlation Coefficient Indicates the Direction

question 56

True/False

The magnitude of the Pearson correlation coefficient indicates the direction of association, while its sign indicates the strength of the association.

---

Definitions:

Liability

A company's financial debt or obligations that arise during business operations, to be settled over time through the transfer of economic benefits.

Owner Contribution

Capital injected by the owners into the business, increasing equity.

Creditor

An individual or institution that lends money or extends credit to another party, expecting to be repaid the principal amount along with interest or to receive goods and services.

Equity

The residual interest in the assets of an entity after deducting liabilities, often equated with ownership equity in a company.