If Two Variables Show a Positive Linear Relationship in a Scatter

question 15

Multiple Choice

If two variables show a positive linear relationship in a scatter diagram:

• A) most of the data values will plot in the lower left-hand quadrant.
• B) most of the data values will plot in the lower left-hand and upper right-hand quadrants.
• C) most of the data values will cluster close to the x and y axes.
• D) the data will cluster in the center of the graph.

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Definitions:

Profitability Index

A calculation that measures the relative profitability of an investment, by dividing the present value of future cash flows by the initial investment cost.

Share Price

The current price at which a single share of a company's stock can be bought or sold in the financial markets.

Profitability Index

A financial tool used to determine the relative profitability of an investment, calculated as the present value of future cash flows divided by the initial investment cost.

Shareholder Wealth

The total value of all financial and capital assets owned by the shareholders of a company, aimed to be maximized through corporate strategies.