There Is a Positive Correlation Between Two Variables X and Y

question 1

Multiple Choice

There is a positive correlation between two variables x and y. Which of the following statements is true?

• A) As x increases, y will increase
• B) As x increases, y will decrease
• C) As x increases, y will remain unchanged
• D) We cannot say what happens as x increases

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Definitions:

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows or in determining the interest rate charged to financial institutions for loans from the Federal Reserve.

Pension Plans

Financial programs established by employers to provide retirement income to employees.

Current Accounting Standards

The latest guidelines and principles established by regulatory bodies for the preparation and presentation of financial statements.

Smoothing

An accounting practice where companies level out peaks and troughs in their financial statements over time to present a more consistent financial performance.