Use the Rank Correlation Coefficient to Test for a Correlation

question 25

Essay

Use the rank correlation coefficient to test for a correlation between the two variables. Use the
sample data below to find the rank correlation coefficient and test the claim of correlation
between math and verbal scores. Use a significance level of 0.05. $$\begin{array} { l l l l l l l l l l } \text { Mathematics } & 347 & 440 & 327 & 456 & 427 & 349 & 377 & 398 & 425 \\\hline \text { Verbal } & 285 & 378 & 243 & 371 & 340 & 271 & 294 & 322 & 385\end{array}$$

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Definitions:

Market Portfolio

A theoretical bundle of investments that includes every type of asset available in the market, with each asset weighted according to its total presence in the market.

Time-Weighted Return

A measure used to evaluate the performance of an investment portfolio by calculating the compound rate of growth over a specified period, eliminating the impact of inflows and outflows of money.

Dividend

A portion of a company's earnings that is paid to shareholders, typically on a quarterly basis, as a reward for investing in the company.

Share

A unit of ownership interest in a corporation or financial asset that gives the holder a claim on part of the corporation's assets and earnings.