There Is a Strong Correlation Between Verbal SAT Scores and College

question 35

Multiple Choice

There is a strong correlation between verbal SAT scores and college GPAs.This does not mean however, that higher SAT scores cause higher grades in college.But what could explain this relationship?

• A)The confounding variable gender.
• B)The high (low) SAT scores and high (low) GPAs both result from a common cause.
• C)Both SAT scores and GPAs change over time.
• D)The relationship is purely coincidental.

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Definitions:

Capital Structure

The composition of a company's funding through debt and equity, and how it impacts its risk and value.

Fixed Cost

Business expenses that remain constant regardless of the level of production or sales, such as rent, salaries, and insurance premiums.

Financial Leverage

The use of borrowed funds with a fixed cost in an attempt to increase the returns to shareholders by magnifying investment gains or losses.

EBIT

Earnings Before Interest and Taxes, a financial metric that calculates a firm’s profit excluding interest and income tax expenses.