A 001 Significance Level Is Being Used to Test a Correlation

question 164

Multiple Choice

A 0.01 significance level is being used to test a correlation between two variables. If the linear correlation coefficient r is found to be 0.591 and the critical values are r = ±0.590 what can you conclude?

• A) There is sufficient evidence to support the claim of a linear correlation between the two variables.
• B) There is not sufficient evidence to support the claim of a linear correlation between the two variables.

---

Definitions:

Direction

In finance, it refers to the trend or movement of market prices or interest rates.

Profit Margin

A financial metric that shows the percentage of revenue that exceeds the costs associated with making or buying the goods or services sold.

Net Income

What remains as a company's profit once revenue is adjusted for taxes and expenses.

Return On Assets

A financial metric that measures the profitability of a company relative to its total assets, indicating how efficiently a company uses its assets to generate earnings.