A Correlation Coefficient Indicates

question 43

Multiple Choice

A correlation coefficient indicates:

• A) only quantitative information about a relationship between variables
• B) only qualitative information about a relationship between variables
• C) the relationship between the independent and dependent variables
• D) the strength and direction of the relationship between variables

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Definitions:

Interest Compounded

The process whereby interest is added to the principal sum, so that from that moment on, the added interest also earns interest, leading to exponential growth.

Annuity Growth Rate

The rate at which the value of an annuity investment increases over time due to interest and investment income.

Present Value

The current estimation of a future financial sum or series of payments, when discounted at a specific rate of return.

Discount Rate

The interest rate charged to commercial banks and other depository institutions for loans received from the central bank's discount window; also used in discounted cash flow (DCF) analysis to present value future cash flows.