Interpret the Value of Correlation Coefficients and Squared Correlations $$\begin{array} { l r r } & \text { Stock Price } & \text { EPS } \\\text { EPS } & 0.875 & \\\text { PE } & 0.323 & - 0.111\end{array}$$

question 21

Multiple Choice

Interpret the value of correlation coefficients and squared correlations.
-Shown below is a correlation table showing correlation coefficients between stock
Price, earnings per share (EPS) and price / earnings (P / E) ratio for a sample of 19
Publicly traded companies. Which of the following statements is false?
Correlations: Stock Price, EPS, PE $$\begin{array} { l r r } & \text { Stock Price } & \text { EPS } \\\text { EPS } & 0.875 & \\\text { PE } & 0.323 & - 0.111\end{array}$$

• A) EPS is the best predictor of stock price.
• B) The strongest correlation is between EPS and stock price.
• C) There is a weak negative association between PE and EPS.
• D) PE is the best predictor of stock price.
• E) The weakest correlation is between PE and EPS.

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Definitions:

Minorities

Groups in a society distinguished by cultural, ethnic, racial, religious, or language characteristics, who hold fewer positions of power or have a smaller population compared to the dominant group.

Sex-Typical Roles

Represents the behavioral norms and expectations associated with one's biological sex in a given society.

Renegotiated

The process of revising the terms of an agreement or contract after initial negotiations.

Devalued

The perception or treatment of someone or something as less valuable or important.