If Two Variables Are Correlated and One Occurs Earlier in Time

question 48

Multiple Choice

If two variables are correlated and one occurs earlier in time than the other, then we can conclude

• A) That one variable is the cause of the other
• B) That the earlier variable is the cause of the later variable
• C) That the earlier variable might be the cause of the later variable
• D) That the later variable might be the cause of the earlier variable

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Definitions:

Equity

The value of an ownership interest in a company, represented by the share of assets after all liabilities have been deducted.

Treasury Bills

Short-term government securities issued at a discount from the face value and maturing at par, used as a means for governments to borrow money.

Call Option

In finance, it refers to a pact allowing the acquiring party the opportunity, without being forced, to purchase assets like securities, bonds, or commodities at a price that is determined beforehand, within a certain time limit.